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The election uncertainty is over and like many news channels are saying, "The People of India have spoken". Hopefully, the rabble-rousing, the mud-slinging, the pot-shots and the name calling will subside and we will all get back to business at-hand.
India has a vibrant democracy where the sheer size of the electorate - more than 850 million eligible voters - is mind-numbing. When ~70% people vote, the number of votes we are talking about is more than 550 million. To put things in perspective, the total population of USA, the second largest democracy, is less than 350 million. I got an interesting image from social media, reproduced below, about the number of countries India is made up of in terms of population of various states.
The Nifty, as expected, has been on a roller-coaster ride in the last two months due to the election's uncertainty and external factors like US-China trade war. See below for the chart of the Nifty movement in the last two months and just today.
People who remained invested in the Equity market may feel vindicated and people who exited or stayed on the side-lines may feel they have missed the bus. The actual scenario should be neither. Elections will happen every five years. The long-term performance of the market is dependent upon the long-term potential of the country and the growth of the economy. What stands in India's favour is the huge consumer market, the diversity of the demographics, the young population and the inherent strength of the democratic system.
Two questions that will come to your mind are:
1. Have I missed the bus?
NO, YOU HAVE NOT! Stay aligned to your goals, asset allocation and long-term investment horizon.
2. When is a good time to invest?
NOW! It is not possible to time the market unless someone is gifted with clairvoyance. There are always opportunities in each asset class. For example, if equity market is overvalued then debt is a good option to provide better than Fixed Deposits. As long as you do asset allocation factoring in the market valuation, maintaining optimal diversification and keeping the long-term investment horizon, your portfolio will flourish.
The Indian electorate has always been responsible and has voted this time for stability and continuity. While Mitraz makes course-corrections based on various factors, we have a plan for every client based on their unique situation.
The writer is the Managing Director of Mitraz Financial Services Pvt. Ltd and can be contacted at firstname.lastname@example.org