Outlook Talks: Satish Padmanabhan & Nidhi Sinha Discuss Elections’ Impact on Stock Market

OutlookIndia

Outlook's Management Editor Satish Padmanabhan talks to Nidhi Sinha, Editor of Outlook Money about the impact of elections on the stock market.  Follow us: Website: https://www.outlookindia.com/ Facebook: https://www.facebook.com/Outlookindia Instagram: https://www.instagram.com/outlookindia/ X: https://twitter.com/Outlookindia Whatsapp: https://whatsapp.com/channel/0029VaNrF3v0AgWLA6OnJH0R Youtube: https://www.youtube.com/@OutlookMagazine Dailymotion: https://www.dailymotion.com/outlookindia  #ReportersGuarantee #Elections #LokSabhaElections2024 #ElectionResults #ElectionUpdate #StockMarket

Transcript

00:00 Hello and welcome to Outlook Live again. We have with us Nidhi Sinha, editor of Outlook

00:09 Money. You know the other big story Nidhi apart from you know the political ups and

00:13 downs of today's result day has been the stock markets. The market which were rallying so

00:18 high but really zooming in the last few days and up to the elections and even before. Of

00:25 course they have all crashed today. It's heading down about 6% now. So how do you read this?

00:30 Is it just a direct reaction to what is happening in the counting in the results?

00:35 Yeah, so typically Satish what happens is on the same day of the election results the

00:39 market does react to the whatever the results are. But if you look at the long term historically

00:45 it has been seen that you know the effect wanes as time goes by. So like at Outlook

00:52 Money we always say that when you are in the stock market stay there for the long term.

00:56 In fact historical numbers also show that you know whenever a majority government is

01:00 in then the stock market does well for at least 6 months. Of course there have been

01:05 exceptions like 2019 was an exception because Covid came in soon after. But usually that

01:12 happens and this time of course you know there was a surprise. People were surprised about

01:19 India Alliance doing so well and that's why people were in fact Amit Shah said that

01:23 the markets will rally on June 4th and all of that. So people were in very high spirit

01:28 so this came as a shock to the market because of which it's down almost 4600 points now

01:33 more than 6% like you said.

01:35 Because it is also said that you know the markets really discount the elections a lot.

01:40 It's not as if there is a direct correlation to you know Indian election whether it's

01:44 an assembly election or the national election. So is it like some kind of a correction on

01:49 the downside and which will soon maybe you know be rectified?

01:53 So not really. Like I said that you know on the election day the market will react to

01:57 such shocks.

01:58 Whether on the upside or the downside.

01:59 Yeah, any big event that happens the market does react to it and that is how it has reacted

02:04 today. But when it comes to long term investing or the long term direction of the market then

02:11 there is no real need for worry because the macroeconomic factors remain strong for India

02:16 in terms of growth numbers and other factors in terms of policy changes and now that you

02:21 know though the results are still to be out more or less it seems that NDA will you know

02:27 cross the halfway mark.

02:28 I mean with a much reduced strength but looks like as of now it's…

02:32 Much reduced yeah but there would be some kind of continuity is what is appearing as

02:36 of now. So by that logic the markets might remain volatile for some time because it's

02:42 not a clear majority like it was expected but it will go back on track. It is volatile,

02:50 markets are volatile.

02:51 It's volatile yeah but you know in a growing economy like ours in a developing country

02:54 with the you know the economy growing the way it is, our markets have also expanded

02:59 isn't it? I mean they have much more broad base now. A lot of people are investing this

03:03 year, number of retail investors I think it has grown tremendously. So is that a, I mean

03:09 that is also a stabilising factor?

03:12 So see Satish what happened after Covid, I will go back to Covid because that is the

03:17 time when a lot of retail investors kind of entered the market. People who were not investing

03:22 in equities earlier they suddenly saw merit in investing in the stock market and they

03:27 entered this domain. So apart from of course there are domestic institutional investors

03:32 like mutual funds and other big investors but the retail strength has also kind of you

03:37 know added a lot of strength to the market in terms of the volume of the market. So definitely

03:43 retail investors will, the hope is that retail investors will continue to save and they will

03:49 continue to be in the market because that kind of you know they have a lot of trust

03:54 in the market. Of course they have to be wary about it also and those are the nuances of

04:01 course but in general people have kind of understood that you know stock markets is

04:06 where they can really make money.

04:08 Because you know the next question I wanted to ask is that you know the small investor,

04:11 you know for him I know it's good advice that you're giving that you know who if you are

04:15 in the market be invested, don't you know sort of do any knee jerk reaction but you

04:19 know for a small investor it is quite scary. I mean it sends a chill when it there's a

04:24 6% drop you know. So how would he, I mean how he or she should react?

04:30 So I agree with you Satish that it can be scary for especially for investors who are

04:34 new to the market but what remains a fact is that markets are volatile and in you know

04:41 during events and such highs and falls of the markets the best thing to do is to do

04:47 nothing and especially if you are invested in the long term and people who have kind

04:51 of short term goals they of course I am assuming that they would be in FDs and other debt instruments

04:56 instead of being in the market, the market being so volatile because you can never trust

05:01 your money if you need it say six months later, one month later in the stock market. So that

05:07 is something that people have to keep in mind, they have to of course it also gives an opportunity

05:12 to a lot of investors to kind of invest some amount of money because the markets are at

05:16 low level but I would also want to add that they should do that only after looking at

05:22 their portfolio requirements, when they do they need money next and all of that and asset

05:29 allocation is something that is very important to look at because you do not want excess

05:33 equity in your portfolio in the long term. And I think in Outlook money is one advice

05:37 that you always keep giving to the small investors is maybe take the mutual fund route rather

05:41 than the direct. So I would say continue to do your SIPs, stay invested, if you have extra

05:47 and you think you do not need that money for anything else, top up your SIPs and if you

05:52 are entering the stock market be very very, seek advice and if you are doing it on your

05:57 own maybe stick to just large caps for now.

06:00 Okay, so I think the one or two main takeaways from this little discussion is that the advice

06:05 to the small investors is to stay invested, do not get no knee jerk reaction to these

06:11 ups and downs like this. Of course as I said it is scary but hang on, hang in there and

06:17 you are saying that the fundamentals are strong, the economy is growing and hopefully what

06:22 we have lost today should be gained in a few sessions.

06:25 Yeah, yeah, absolutely. So in a maximum, in a few weeks we would again, we might see because

06:31 you know experts have been saying that, so many analysts have been saying that because

06:35 markets are robust, it is just an event based reaction that has happened today, what we

06:39 see today and if there is continuity in the government, I mean it could well come back

06:46 to the levels it was at.

06:48 That is great to hear, that is good news for the small investors, do stick to Nidhi's advice,

06:52 thank you very much for coming over Nidhi and this.

06:53 Thank you so much, thanks a lot Satish.

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