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Elections 2014- Market Predictions

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The elections results are going to shape the market trend ahead in 2014. This presentation covers market prediction post elections and it will help you design your investment strategy based its …

The elections results are going to shape the market trend ahead in 2014. This presentation covers market prediction post elections and it will help you design your investment strategy based its outcome.

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  • Election 2014 has seen a good response as compared to previous elections and we all are awaiting the final results. Kotak Securities brings you Election 2014 market predictions to help you with your investments. Visit http://www.kotaksecurities.com for more details.

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  • 1. Elections 2014 - Market Predictions
  • 2. Pre-elections market scenario C • In the last 3 months, benchmark indices has given more than 14% returns and individual stocks have returned much more. • There have been positives in the form of a better CAD situation, a stronger / stable rupee, some reform initiatives from the Government, etc. • However, the most important trigger has been the expectations from the election process. In the short term, markets will react to the expectations on election results and also the actual results.
  • 3. Views on post elections scenario • Markets will start factoring in the potential growth rates, valuations, monsoons, global developments, etc. most of these factors are not exactly supportive right now. • Sensex valuations, at about 15x consensus earnings, are not exactly cheap. Also, with the major event out of the way, some participants may look at taking out the significant profits they would have made. This may result in profit booking • In the long – term, markets will move depending on the economic policies of the next Government as well as the RBI moves on interest rates.
  • 4. Dealing with volatility • Stay positioned to make the most out of the uptrend which may continue post the election results. • However, on the other hand, one should be able to protect his/her portfolio in case the political outcome is not to the market’s liking or if there is a correction in the market. • Investment Recommendations: 1) Adequate exposure to the export-oriented themes as well as some of the defensive stocks. 2) Favourable exposure to good quality stocks in cyclical and investment-oriented domestic sectors is recommended.
  • 5. • In case there is a fractured mandate, the markets will turn to export- oriented and defensive sectors. • The rupee may depreciate, which may be positive for export-oriented stocks Expected market scenario
  • 6. Public sector banks and infrastructure • A selective approach is recommended for these sectors. Private sector banks are preferred over PSU banks on the back of better asset quality, relatively lower requirement of additional capital, higher exposure to retail loans, etc. • For the infrastructure sector, Companies having credible managements and strong balance sheets are preferred. They will be in a better position to bid for projects over the medium term, based on their better balance sheets.
  • 7. Sectors expected to perform in 1-2years • Assuming a stable government at the centre, domestic cyclical and infrastructure related sectors will out-perform. • Select export oriented companies may also perform well due to the improved demand scenario in developed economies. • However, if the election results are not to the market’s liking, defensives and export-oriented sectors are likely to outperform.
  • 8. Review on the 4Q earnings results • 4Q results have been largely in line or marginally better, subject to some exceptions. • There have been good results from most companies in sectors like Logistics, Banks, IT, etc. • With revenue growth not picking up, domestic companies have improved efficiency levels and cut costs. • These have led to an improvement in margins for several companies and this bodes well for the future quarters.
  • 9. Advice to the retail investor • Don’t get carried away by the sharp moves which have already happened in the markets. • At the high levels, one should be very selective and put money gradually, with a medium-long term perspective, into stocks which have sound fundamentals and credible managements. • Reasonable valuations will be an added advantage.
  • 10. Get eBooks Website Thank You Guess The Sensex for election results day & you could win a smartphone or movie vouchers!
  • 11. Disclaimer: Kotak Securities Limited, Registered Address: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E) Mumbai 400 051. Correspondence Address: 6th Floor, Kotak Infinity, Building No. 21, Infinity Park, Off Western Express Highway, General AK Vaidya Marg, Malad (East), Mumbai 400097. Tel no: 66056825. SEBI Registration Numbers: NSE INB/INF/INE 230808130, BSE INB 010808153 / INF 011133230, OTC INB 200808136, MCX-SX INE 260808130/ INB 260808135/INF 260808135 , NSDL IN-DP- NSDL-23-97, CDSL IN-DP-CDSL-158-2001, AMFI ARN 0164. Compliance Officer - Mr. Sandeep Chordia. Tel. No: 022 6605 6825. Email id: ks.compliance@kotak.com. In case you require any clarification or have any concern, kindly write to us at below email ids: • For Trading Account related queries: service.securities@kotak.com • For Demat Account related queries: ks.demat@kotak.com. • Alternatively, you may feel free to contact our customer service desk at our toll free numbers 18002099191 or 1800222299. You may also call at 30305757 by using your city STD code as a prefix. • In case you wish to escalate your concern / query, please write to us at ks.escalation@kotak.com and if you feel you are still unheard, write to our customer service HOD at ks.servicehead@kotak.com.