General Elections 2024: BJP not winning 400 seats won’t be negative for market, says Naveen Kulkarni of Axis Sec PMS

Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS, believes that BJP not winning 400 seats will not be negative for the market at all. A stable and predictable political regime is most important right now. Therefore, irrespective of the outcome, it won't significantly affect the market, he explained. 

Kulkarni further noted that if FIIs are not big buyers post election, as they have been net sellers recently, then any significant market movement post election results can be ruled out, and it is more likely to be business as usual. His Nifty target for December 2024 is 25,000. 

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What are the key reasons behind the recent correction?

Markets have seen some corrections due to volatility spikes but have also moved up post correction as investors saw opportunities at lower market levels. Some corrections in markets are always good, and the normalisation of market volatility keeps valuations in check. Market volatility before May 2024 was quite sluggish, but it has seen a reversion towards the mean before recently spiking above 20 levels. Higher market volatility indicates higher risks, which means that the market is more likely to consolidate around the current levels.

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Will BJP not winning 400 seats have a negative impact on the Indian market?

BJP not winning 400 seats is not negative for the market at all. A stable and predictable political regime is most important right now. Therefore, irrespective of the outcome, it won't significantly affect the market.

Why have the FPIs been on a continuous selling spree? Will it continue post election results? Or a possible Modi win will give confidence to foreign investors to start buying again.

FII investors look at markets globally. China's market valuations were cheap, and the government's focus on reviving growth has given investors confidence to allocate more capital to the market. Apart from China, other markets have also seen better returns in recent times, which has led to the movement of funds from India to other countries. Thus, the reallocation of trade was in line with global strategy and not event specific. A stable political regime will likely see money returning to India as that will provide investors with better long-term visibility.

Will the last 2 weeks before the election results see a rally or a correction?

As of now, significant correction seems unlikely, but these short-term events are challenging to predict.

Read here: Election and Market: Weak voter turnout making investors nervous, say experts

Most experts believe that since a Modi win has been priced in, there will not be much movement on election results day. Do you agree? Do you have a post-election Nifty target?

This is a good assessment, as the rally after the state elections in December saw the market scaling new heights. The PSU rally has continued well past that period until very recently. Thus, most of the positives are largely priced in. If FIIs are not big buyers post elections, as they have been net sellers recently, then any significant market movement can be ruled out, and it is more likely to be business-as-usual post elections. Our Nifty target for December 2024 is 25,000. We do not consider short-term events because they are influenced by numerous technical factors and can exhibit random behavior.

Do you see RBI cutting rates in the post-election policy?

RBI will continue its course to hold on to the rates even after the elections. We do not see RBI changing its course based on elections. Overall, we do not see a rate cut in 2024.

On the back of the current volatility, which is likely to continue, won't it be a better idea for low-risk investors to move to gold? Or will equity give better returns?

Gold as an asset class has its own set of challenges. However, within equities, quality stocks like HDFC Bank and others are now available at much more reasonable prices. Thus, buying high-quality stocks is a good strategy at this juncture.

Read here: ‘Market expecting positive end to the elections’

Do you have any contra bets with elections in mind?

As indicated earlier, quality stocks are available at reasonable prices now. We also believe that consumer stocks could do much better post election as they have underperformed in the last year and are now available at reasonable valuations. Thus, quality consumer companies could be good contra bets at this juncture.

One piece of advice for new investors?

Maintaining a high-quality quotient is a must in this market as volatility continues to rise. Another critical factor is liquidity. Thus, both these factors will help manage market volatility over the next couple of months.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.