Election impact on your mutual funds - Short term and long term

India is a land of opportunities.

The much-awaited results of the General elections of India were announced on June 4, 2024. In a surprise turn of events, the outcome of the elections has come as a negative surprise to the equity markets. Particularly as expectations sky-rocketed after the very optimistic forecasts by exit pollsters over the weekend.

Elections do decide the fate of the population, however, it is the will of the people to innovate, pursue and achieve their dreams irrespective of the hurdles. India is a young country of entrepreneurs and professionals who work hard to build wealth for themselves and their families.

If we look at the past 5 elections i.e. a period of the past 25 years, the stock market has remained volatile for about a month to six months, however, that volatility has contained within 20% in most of the cases. If there has ever been a trend of wealth creation via equity and equity mutual funds, it has always been upward over the long term, irrespective of the short-term hiccups.

Over the past 25 years, we have seen PM Vajpayee resign, the Kargil War, the Dotcom Bubble, the Gujarat Riots, the 2008 US financial crisis, the Satyam Scandal, Chinese currency depreciation, the IL&FS default, Demonetization, the Yes Bank crisis, Covid, Russia-Ukraine etc. Irrespective of all this, the stock market has created wealth. This is because such events make the market fall in the short term, however, do provide opportunities to invest for the long term.

If we look at any period of the past 25 years, if you had invested any time for a period of more than 5 years, the chance of a negative return is negligible.

Now what can we expect next for the economy due to the coalition NDA government that comes to power?

• We have spent a good no. of years focusing on building infrastructure for manufacturing, housing, schools etc. Going forward, we could see development in much of a rural economy.

• The government shall focus on reducing taxes (income tax as well as GST), surcharges etc, which would give more power to the middle income, lower middle income group. This would boost the consumption.

• States like Andhra Pradesh, and Bihar might get special status which would mean they will develop much faster than the other states.

• There would be sector rotation in the market - wherein consumer durables, healthcare, and private banks might do well again.

• The culture of investing in mutual funds, SIPs is now inherent in people’s DNA. Mutual Funds have Rs. 1.32 lakh crores in cash, some of which will be invested gradually in defensive sectors.

If you would like to discuss your portfolio (Mutual fund or stocks), and market/economy, please schedule as per mutually convenient time. Here is the link to my calendar - https://calendly.com/tejas-fincare/mutual-fund-stock-portfolio-evaluation

There are multiple subscriptions every family has. One for entertainment (Netflix or Amazon Prime), another for food deliveries (Zomato or Swiggy), groceries (Instamart or Blinkit), music (Youtube or Saavan), internet, etc. But what about a subscription that fulfils the dreams that they share?

A family has as many dreams as it has members. Often even more. Having multiple SIPs, one for each of them can help you fulfil them with ease.

Warm regards,

Team Fincare

Tejas L