Markets may remain choppy but opportunities do open up across, says Sunil Singhania of Abakkus

Sunil Singhania, Founder, Abakkus Asset Manager LLP

At a time when uncertainities in the market is on the rise due to no clear majority of a single party in 2024 election outcome, Sunil Singhania led Abakkus Managers said that they expect choppiness to stay in the near-term. However, they suggested investors to look for opportunities across good quality companies from 2-3 years perspective.

"While BJP fell short of the majority mark of 272 seats on their own, the coalition NDA with ~295 seats is well past the halfway mark and looks set to form the government. Though a clear majority with no dependency risk on allies would have been an ideal scenario, we are not overly worried as these allies were pre-poll ones and should continue to be a part of the NDA alliance and the new Government," analysts said.

Following vote counting trends, the Indian equity markets corrected sharply on June 4, with Nifty falling by 6 percent and mid-and smallcaps bearing the brunt even further. This surprise turn of events took place after exit pollers predicted a landslide victory for the ruling government.

However, Abakkus analysts said that such sharp upswings in the market is usual pre-and post-elections. Markets finally stabilise one-to-six months post the event, they said stating historical analysis.

"Over the past five elections dating back to 1999, Indian equity markets have always given positive returns six months after the elections. This includes coalition governments being formed and outcomes less favourable than the current one," analysts reiterated.

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Going ahead, Abakkus believes that Modi would form the government for the third consecutive time and any worries about socialistic policies would dial down as the incumbent government will balance growth with populism.

"We expect clarity to come over the next few days in terms of the government formation and also the narrative of the government post this not-so-favourable election outcome. Till then, we expect markets to be choppy with bouts of sharp movements on either side," they added.

Against this backdrop, investors might get an opportunity to invest in companies which look good from the next 2-3 years' perspective, suggested analysts. But, they continued to caution against momentum investing and recommended to follow fundamental-based approach to investing.