The Sensex has shed nearly 1,300 points since last week on likely unfavourable verdict for the BJP. The index has seen some short covering on December 11 as it seems the market has already priced in the state election verdict.
Congress leading in key states is a great positive for the Indian democracy. It reflects factors like actual growth, risks, financials and economy are important not temples, said Ajay Srivastava, MD of Dimensions Consulting.
He expects good days for heavy commercial vehicle and auto industry where direct transmission of rural spending is likely to happen in coming days. "As it is the worst for ruling party, spending taps will open up. So if one stays put 30 percent in fixed income then at the end of year, the return will be higher than index returns."
The market on December 11 recovered after a gap down trade, driven by short-covering. Srivastava said what has happened now is the selling ebbing out and a slowdown in FIIs tapering.
Any surprise, if there is, will be from global markets as there can be arrests of executives. "So the focus globally would be more related to US and China, where both could be arresting each of executives."
So in such situation or volatility, fixed income returns will be higher than equity markets as domestic packages in terms of populist measures will be there. So one should keep some cash with them to take benefit of the situation.
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