Earlier in the month, when the exit polls gave a clear verdict to the NDA, the markets reacted positively with the Sensex jumping up by over 1400 points. On judgment day with the results confirming the verdict, the markets showed their euphoria again with the Sensex scaling mount 40,000 before correcting itself.
With a clear mandate, confidence is expected to return to the markets and corporates after months of uncertainties and help in correcting the cyclical slowdown in the markets and the economy. Riding on this wave, the markets are expected to do well going forward. Investors who had mostly adopted a wait and watch policy are expected to come forward and invest in the markets again soon. Both domestic institutional investors and foreign institutional investors are expected to come back into the market with full force and remain stable in the market with political stability and the majority government giving an assurance that there will be attention towards reforms.
Experts are of the opinion that mid caps and small caps, which have been under performing in the market for several months will outperform riding on the rising wave. Companies with good cash flow would be in demand. This is where the bulk of the retail investors are expected to be now.
The election verdict is also bringing in confidence that with the political compulsions behind, the majority government will have a free hand in dealing with development issues and concentrate on growth and market reforms. The regulators are expected to play a stellar role in improving the investment climate in the country.
Mutual Funds have always been a favourite of the investors at the retail level. AMFI data shows that the mutual funds industry added about Rs9.13 lakh SIP accounts each month on an average during the financial year 2018-19, with an average SIP size of about Rs3,070.
Though investors remained cautious in April because of the elections, the inflow into equity funds remained pretty strong. There was a steady growth in equity SIPs and continued net inflows into equity schemes during the month. Assets Under Management of the mutual fund industry stood at Rs24.8 lakh crore in April, up four per cent month-on month, and while equity mutual fund inflows declined in April, investments through SIP stood at an all-time high. Mutual Funds saw a total investment of Rs1 lakh crore in April. This was reflective of the overall retail and institutional investor confidence in the India growth story.
Over the next few months with political uncertainties behind us, and with global headwinds receding, investors are expected to come back to the market coupled with improvement in corporate earnings.
The first couple of months of every financial year are a busy time for salaried employees who plan their taxes during this period. But tax planning is no easy job and requires careful planning and strategy and so people often consult experts to figure out where to put their money in order to get the best tax benefits. Our cover feature looks at the various nuances of tax planning and gives sound advice on what is most beneficial for the taxpaying community. As said before, post elections, markets are expected to rebound with increased investor activity. We present two stories on the impact of the verdict on equities and where to invest post elections.
The next few months would be busy for investors as they take a fresh look at the investment options. The markets are expected to rise for some time before corrections set in. This may be a good time to invest as long as the markets stay buoyant.