Hi Friends
I wanted to start the discussion on the possible impact of General Election 2019 on the stock market for next 12 to 15 months,
While in the long run in the last 25 years, market has been indifferent to the party or the prime minister, however there have been extreme sentiments either on positive side ( read 2009/2014 post election rallies) or on negative side ( 2004 sell off post election,2013 negative sentiments)
I wanted to mention the following triggers for sell off.
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Markets are almost running at 52 weeks , earnings growth is already factored in at the current levels.
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Oil prices remains at higher levels and are not expected to go down, will have impact on the INR USD levels and will result into slippages of the fiscal deficit,
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There is no expectation of RBI cutting interest rates, on the other side if oil prices remains high, that may result into increased rates, having negative impact on the sentiments and for new investments
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Recent cut in tax rates in US and further actions from US govt are resulting into lot of new investments in US, which will impact flows to emerging economy like India
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It does not look like that the end of the worries of Pharma and IT is expected in near future and will result into subdued performance from these sectors.
Writing all above, the following are still very strong triggers for the buy/hold.
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GDP is showing strong growth and is expected to remain at 7% to 9%, with nominal growth at 12 to 15%
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government spending in infrastructure like Roads, affordable housing is visible and will continue to have multiplier effect on the economy , and also will remain great news for infrastructure companies.
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There are pockets/ segments/companies in the economy, which are showing strong growth after GST implementation as economy is moving from informal to formal sectors ( like D-Mart, Reliance Retail, Bata etc.)
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Huge investments from big tickets investors like ( Amazon- USD 2 billion, IKEA 2 billion, Bullet train project, USD 5 billion or more ( from Japanese companies) USD 2 billion by Wallmart, will have positive triggers.
I have tried to write a balance view here and will invite comments from other valuepickers.
