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Don't over-emphasise Karnataka poll outcome, say market experts

Updated : May 15, 2018 01:18 PM IST

Here's how market experts are viewing the outcome of Karnataka election and its impact on the market.

Ajay Srivastava, CEO, Dimensions Corporate Finance Services

“I do not think anybody is going to take money out of the market just because the ruling party does not win. The reason being that people are getting more and more agnostic towards the fact that who is ruling the centre, that is the political agenda. In the economic agenda, people have to respond to higher crude prices, higher interest rates and yields being higher. Companies with foreign currency loans will have to record huge mark to market (MTM) losses in the coming quarters as the rupee remains where it is today. So, I do not think there will be major selling.”

Arvind Sanger, Managing Partner, Geosphere Capital Management

“The challenges for India are beyond whether or not BJP winning a decisive victory. I do not think it’s particularly meaningful indicator because the Indian voters are smart enough that he/she does not vote for national elections the same way that they vote for state elections.”

Ananth Narayan, Professor of Finance, SPJIMR

“It does look like there is a lot of pent-up demand and nervousness sitting in the system. The nervousness you see both in the bond market and in the Fx market, I think are related. I think foreign institutional investors (FII) are nervous as well. Unfortunately, the pressure of buying dollars on every dip will continue even if you see a good result today from Karnataka for the BJP. You might see a temporary dip in dollar rupee, but that dip will still get bought. There is a lot of nervousness in the system.”

Sunil Singhania, Founder, Abakkus Asset Management

“Elections will come and go. There are now macro headwinds and a bit micros are looking good. So, market will keep on having challenges and opportunities. As long as structural growth is there, India is going to be a $7 trillion economy and there will be opportunities in every circumstances.”

Sonal Varma, MD and Chief India Economist, Nomura

“Second half of FY19 is where we need to start getting a bit more cautious. Even keeping aside the base effects, some of the increases we have seen in oil prices is a negative in terms of trade shock. Going into the elections, we have seen historically that private investment pause waiting for the political certainty to emerge. So, we could see some economic slowdown in the second half of FY19 but given, we have just entered FY19, for now we will see fairly solid growth numbers.”

Vikas Khemani, President and CEO, Edelweiss Securities

“We are in a transition year, where whole debate between micro and macro settling down is happening. It’s a very challenging market by the way. But having said that, the good part is that the long-term fundamentals are showing you the way, giving you the comfort for you to take little bit leap of faith and take those risks and that kind of approach in my opinion works. So I am comfortable investing at this point in the market, even if one is underperforming, one style is not working well because long-term playout for sure.”

Saurabh Mukherjea, CEO, Ambit Capital

“Farm loan waiver was a plank in Karnataka. As the government has been very clear since the Budget that we will see a hefty minimum support price hike or rather farmers will get 50% profit margin on their crops and the three planks of the election are now well established; its farmer support or populism for farmers, the anti-corruption drive and the age-old issues around religion in country. I think Karnataka saw an early version of that and we will see more of that through the second half of current financial year. But the good news is, we have pushed the elections out three-four months ago from the looks of it.”

Mark Matthews, Bank Julius Baer & Co

“Two major things weighing on the Indian market this year was the higher oil price and the prospect of more government spending ahead of the general election next year and the Karnataka result is. We will see what the actual number is in the end, but these exit polls are extremely encouraging.”
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