Election results 2019: The best of markets is yet to come, says Nilesh Shah, Envision Cap
Markets might have some resistance around the current levels, but clearly the best is yet to come, said, Nilesh Shah, MD & CEO, Envision Capital, in an interview with ETNOW.
Edited excerpts:
The index has seen a move of 4% already. There was a massive thumbs up to the Exit Poll on Monday itself when we clocked 11,800 plus fresh highs. Do you think the best is already in the price?
I do not believe the best is in the price because we were already at these kind of levels a month back, some time around April and what it looks like is that we have just kind of recouped or recovered some lost ground versus where the markets were in April. If the exit polls were to be proven right, then clearly what that indicates is complete removal of the political uncertainty and heralding in an era of stability and that we believe is going to be a very strong case for reforms to get pushed and drive earnings further. In the short term, the markets might have some resistance around the current levels, but clearly the best is yet to come.
This really long drawn out momentous election has played out over seven phases. But I do not think anyone is really factoring in what would happen as an outcome if we were to see the exit polls true. How do you believe the markets would react to that?
If whatever the exit polls have predicted or forecast do not turn out to be true, then obviously that is not a situation or a scenario for which the markets are prepared. Clearly, the markets are predicting or forecasting or expecting a win for the NDA and the government continuing into the second term and if that were not to happen, that will come as a shock to the markets and there could be a correction.
What kind of upside do you see today should we get that reformist government back in power – 2%, 5% or 10%?
If the exit polls were turn out to be true, the markets will definitely try to push itself up towards 12,000 on the Nifty but there would be a lot of people who try to kind of prepare saying okay if the verdict were to turn to be true, let us do some profit booking but keep in mind five years back the markets were at 7200, 7500 when the NDA government won at that point of time and today we are at almost 12,000. So keep your eyes focussed on what could unfold over the next five years and not what would potentially unfold over the next five hours.
Do you think the narrative of the market has been tilted towards consumer, a little bit of pharma and a lot of IT post the NDA-2 verdict? Does it make sense to buy an L&T or a BHEL or an NCC or an IRB because the last five years with the exception of L&T, none of the infrastructure stocks have given great returns?
From an India standpoint, it is always going to be consumer and financials which will have to be the core of any portfolio because these are structural growth opportunities irrespective of who is really in power. Then of course, you can top it up a bit with technology because there are some niche opportunities. Yes, clearly the rate sensitives, the economy sensitives, infrastructure, engineering, materials have been laggards and huge underperformers over the last five years. But if the focus of the next government is going to be on hard infrastructure, then it is going to be difficult to stay out of that entire pack of engineering materials and manufacturing.
Source: economictimes
