In the wake of the unexpected outcomes of the Lok Sabha results, Indian investors are bracing themselves for continued volatility in the stock markets, with analysts urging caution while emphasizing long-term prospects.
The Indian equity benchmarks experienced a sharp decline on June 4, leaving investors jittery about the future trajectory of the market.
However, market experts suggest that while volatility may persist in the coming days, the overall sentiment remains optimistic for positive returns in the long run.
Following a tumultuous period, both Sensex and Nifty rebounded on Wednesday, offering a glimmer of hope to investors.
However, uncertainties linger amidst the formation of a new government.
Amar Ambani, Executive Director of YES Securities, highlighted that the election results prompted a necessary correction in the market due to already elevated Indian equity valuations.
Ambani hinted at potential market stability with the new government, especially if the NDA, led by Prime Minister Narendra Modi, remains in power, despite possible further corrections.
Pradeep Gupta, Co-founder and Vice-chairman of Anand Rathi Group, echoed similar sentiments, emphasizing the importance of long-term outlook amid short-term fluctuations.
Gupta stressed the need for investors to remain informed and focused on fundamentals, particularly as policy continuity plays a crucial role in shaping market sentiment.
In terms of sectors, analysts anticipate benefits for industries such as infrastructure, defence, and capital goods, as the government prioritizes development projects and policy continuity.
Consequently, investors are advised to consider allocating their investments in large cap stocks known for their stability and resilience against economic fluctuations.
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