Lok Sabha Elections 2024: Diversify portfolios to cut risk; focus on defensives, says Yes Securities’ Anshul Arzare
Lok Sabha Elections 2024: As markets see a rise in volatility ahead of election results next week, Yes Securities' Anshul Arzare advise investors to diversify portfolios to check risk and focus on defensives to tackle volatility.
Lok Sabha Elections 2024: The Indian stock market remains volatile ahead of Lok Sabha election results next week. The benchmark indices, the Nifty-50 index and Sensex, are down 1.5-2 per cent in the past five sessions. The Volatility Index or VIX also is hovering close to 24, much higher than levels of close to 10 seen in April. Against this backdrop, focusing on defensive stocks will be crucial for investors to reduce risk, says Yes Securities MD and CEO Anshul Arzare.
Many experts believe that the volatility could further rise in the next two sessions ahead of election results and even thereafter. For investors looking to mitigate volatility and cushion the impact, one of the strong strategies suggested is diversification of portfolios apart from taking higher exposure to the defensives. Further, as volatility can remain high after the elections, it will be crucial for investors to focus on choosing value buys and also on longer-term investments.
According to Anshul Arzare, before election results, investors should adopt a strategy to diversify their portfolios across various sectors to mitigate risk. Focusing on defensive stocks, such as those in the FMCG (fast-moving consumer goods), healthcare, and utilities sectors, can provide stability and reduce volatility.
Additionally, maintaining a portion of the portfolio in cash or liquid assets can enable investors to capitalise on market corrections, with buying during dips being a potentially fruitful strategy, suggests Arzare.
According to Arzare, investors need to assess the new government's policies and their potential impact on different sectors after the election results. Based on the election outcome and the government's ability to implement its strategies, investments should be shifted to sectors that are likely to benefit from these policies, such as infrastructure or technology, which might have been highlighted in pre-election discussions.
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However, Arzare said that it is crucial to adhere to long-term investment strategies and avoid making impulsive decisions based on short-term market fluctuations.
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.
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