Investors should not try to predict market trends, but rather react and respond accordingly, says market expert Deepak Shenoy.
While sharing his views on X (formerly Twitter), Shenoy, Founder & CEO, CapitalMind, a SEBI-registered Portfolio Management Services (PMS), said, “Everyone is trying to predict how the market will react if the election outcome is X or Y. If the market goes down, should I withdraw my money now? I don’t know the answer. Hence, I choose to react rather than predict how the market or the election will turn out.”
Indian stock markets have been volatile in recent weeks ahead of the 2024 Lok Sabha election results. Although there is still considerable market expectation that the Bharatiya Janata Party-led NDA will retain power after the elections, there is a palpable sense of tension among market participants due to low voter turnout.
Also read: Will the Indian stock market continue its upward momentum this week? Here’s what experts say
Shenoy emphasized that the stock market reacts strangely to many situations.
He cited the example of Brexit, where the market fell 6% that day but quickly recovered in the following days.
The stock market fell for several weeks after the demonetization announcement, but has since picked up again.
“Even if you predict events correctly, you cannot predict the market reaction. This is even more evident in the 2024 Lok Sabha elections,” Shenoy said.
Also read: How can large-cap stocks provide a cushion against increased volatility?
Elaborating on his views, Mr Shenoy highlighted how the market moved after the 2004 Sabah elections, when left-wing parties were in the ruling coalition.
“Anyone watching the market at the time would have thought this was the end of the market. And yes, it was over for the next two months, the market was down 24% in a few days, but then 3 After a month, it recovered to pre-election levels and for the next three years,” Shenoy said.
“Since the Communist Party came to power, the market has gone up more than 200 percent. That means it has tripled in about two-and-a-half or three-and-a-half years. Even if you had predicted it, you would have missed it.” You would have expected that coming to power would not be good for the stock market, but you would have still seen something like this happen,” Shenoy said.
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Disclaimer: The opinions and recommendations expressed above are those of individual analysts, experts, and brokerages and are not those of Mint. We encourage investors to consult certified professionals before making any investment decisions.
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