A coalition government will slow down decision making, but the market will not be too perturbed, according to Rajeev Thakkar, Chief Investment Officer, PPFAS Mutual Fund.
“Since we started down the liberalisation path in 90s, broadly we have been in one direction, so sometimes welfare takes over, and sometimes economic growth takes more importance,” Thakkar said in an interaction with Moneycontrol.
“Obviously, coalition slows things down a bit, there would be some element of consensus building being required and some key ministries may have to be shared and things like that,” he said.
But he does not see any major change in policy making, which is what the market appears to be worried about.
“I don't think at the policy level anything changes, so GST has been introduced, that will continue to happen, there is a PLI scheme running and there is encouragement for domestic defense manufacturing that will continue to be there, so all the infrastructure works that are currently underway will continue to happen,” Thakkar said.
“Maybe on taxation side, there may be a little more stricter taxation regime, and they will probably want to spend more in poverty alleviation or in terms of creating rural demand or, again very difficult to say, but nothing changes very significantly,” he said.
Thakkar said that despite the volatility of the last couple of weeks, the market is still close to its all-time highs.
“If you take out yesterday's euphoria and today's crash, net loss will be by a smaller amount, maybe 4 percent loss instead of the 7.5-8 percent that we see right now. It's just that recently things had gone up quite a bit and those gains have been given up,” he said.
Thakkar said his fund was sitting on around 15-16 percent cash till last week.
“Valuations anyway were a cause of concern, so it's not that we were keeping cash for any particular election outcome. We have been having cash because investing opportunities have been hard to come back,” Thakkar said adding that some of the excesses are seeing a correction.
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