X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Will elections impact economic growth?
Tue, 10 Dec Pre-Open

These are the times of extreme volatility and irrationality. The domestic growth rate is close to decade lows. There seems hardly any respite in the near term. However, the markets are singing a different tune and touching new highs. One obvious factor behind the current phenomenon is BJP's win in the state elections. Political proponents believe that is a signal of change in the government at the Centre which will turn country's economic fortunes.

This is just another reminder that we hardly ever learn from history. It has been corroborated by stock markets time and again that it is the global macroeconomic factors that determines their levels and direction and not the party in power. An article in Livemint shows real gross domestic product growth at factor cost around election years. The study suggests that irrespective of the party in power - UPA or NDA, the markets have broadly reflected the global macro environment. There have been enough instances when the economy has performed well despite a weak government in place. The events like Asian crisis, global dotcom boom and bust and Lehman crisis explain the Indian stock market movements better than the political cycles.

Even the current highs are mainly on account of foreign money finding its way to Indian stock markets. And of course the sentimental boost from the result of the polls. In such times, we would suggest investors to not fall into the election trap. While such events can lift the markets now and then, sooner or later the ground realities take over. It will be interesting to see if the Indian stock markets can maintain these levels if tomorrow Fed announces a taper with immediate effect.

To conclude, it will be naive to assume that a change in the Government will revive the economy by default. While dramatic policy changes such as the liberalization of Indian economy in 1991 do impact the growth rate, such reforms have been rare and have been taken only as a last resort. In the era of coalition politics, those who are pinning hopes on major reforms are likely to get disappointed. The long term problems in Indian economy are unlikely to fade away. As such, focus on the stocks with robust fundamentals and attractive valuations. And in the long term, you are likely to benefit irrespective of the party in power.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

Equitymaster requests your view! Post a comment on "Will elections impact economic growth?". Click here!

  

Views on News

Two Meetings That Nailed the Idea of Owning Brilliant Smallcaps Without Buying Them (The 5 Minute Wrapup)

Mar 22, 2018

Certain blue chips hold the potential of delivering returns comparable to small-cap stocks. With these stocks, you can get the best of both worlds.

What They Forgot to Tell You About Sensex at One Lakh (Profit Hunter)

Nov 29, 2017

Stocks that could beat Sensex returns in the long term.

Kotak Balanced Advantage Fund: Advantageous For Your Portfolio? (Outside View)

Jul 19, 2018

PersonalFN takes a look at Kotak Balanced Advantage Fund, a New Fund Offer (NFO) from Kotak Mahindra Mutual Fund.

How to Build Affordable Homes in India (Vivek Kaul's Diary)

Jul 19, 2018

Rajiv Talwar, the CEO of DLF, makes a few interesting points in a recent interview.

These Are the Best Stocks for the Next Decade (The 5 Minute Wrapup)

Jul 19, 2018

The start-up eco-system is disrupting each and every sector that we know of. How can Indian investors benefit from this?

More Views on News

Most Popular

How to Avoid a 90% Loss Suffered by This Super Investor(The 5 Minute Wrapup)

Jul 12, 2018

Blindly following super investors is a dangerous game to play. Here's how you can avoid such mistakes.

The Answer to Your Wealth Worries: Small Caps (Especially Now)(Profit Hunter)

Jul 10, 2018

If you're worried about the markets - you are on the wrong track. This is opportunity - put your wealth-building hat on, instead - Richa shows you how...

The Multiple Problems with the Minimum Support Price (MSP) System(Vivek Kaul's Diary)

Jul 11, 2018

The price signals that MSP sends out, creates its own set of problems.

New Fund Offer - ICICI Prudential Pharma Healthcare and Diagnostics Fund - Should You Invest?(Outside View)

Jul 6, 2018

ICICI AMC launches an open -ended equity fund following Pharma, Healthcare, Diagnostic and allied theme.

When Disappointment Panda is Around. Buy Quality Stock like This!(Chart Of The Day)

Jul 6, 2018

Buy Companies that can fight all kinds of Pandas and Bears in the long run.

More

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Jul 19, 2018 (Close)

MARKET STATS