A landslide victory for Narendra Modi-led National Democratic Alliance (NDA) propelled a sense of jubilation in Dalal Street in last few days, with Sensex gaining nearly 300 points when the market reopened on Monday.
Trade analysts opine that the markets will grow in coming days, but investors should be cautious while investing. On Thursday, when the results of Lok Sabha were out with television screen showing early trends for BJP led government, markets jumped to nearly 900 points, but next day the stability was not seen in Dalal Street as market crushed to 1300 points. However, the trade analysts believe that in long run the markets will definitely grow with Sensex crossing 4500 bench mark. Presently, the Bombay Stock Exchange (BSE) is at 40000 points.
Dindayal Barnwal, vice president of Federation of Jharkhand Chamber of Commerce and Industries (FJCCI) said, “The strong and stable Government is advantageous for market. The markets prefer a strong, stable regime because it ensures continuity in economic policies.” However, it is not sure that the markets will grow in the same way in coming days.
Barnwal terming the share market as weather said, “The Sensex is like weather. As it is difficult for a common man to make prediction on weather, same is for share market. There are various factors which influence share markets which includes national as well as international development. If there is crisis in Gulf and middle-east leading to surge in international oil prices, the markets across the globe including India will witness a fall.”
Echoing the views of Barnwal, Soni Mehta another vice president at FJCCI said, “A stable and strong government is good for economy. We expect that under the Modi regime in next five years the market will reach 45,000 points. However, it is always advisable for an investor to invest carefully. While investing money a person should go through the portfolio details of the company in which he or she is investing.”
Mehta further said, “The other important aspect is that investors should not think of short term gain as it is always advisable to invest for longer period.” FJCII treasurer, Rahul Maroo said, “The strength of the mandate for the BJP assures stability in government, stability in governance and continuation of the development agenda for next five years.” However, Maroo said that share market too has chances of manipulation which was evident last week.
According to Maroo, on May 19 when the exit poll results were out market gained 1000 points and the gain remained for next three days, on May 23 when the results were out the market again gained to 900 points, but next day crushed to 1300 points with a negative of 400 points. Maroo said, “The fall in market was primarily due to investors withdrawing their money after initial gains.” The trade bodies member claimed that though volatility is part and parcel of the stock markets it does not last forever. The markets factor in major events like the Lok Sabha elections but eventually go back to their normal functioning.