Missed out of the recent rally? Well, you could still get a second chance.
Excerpts from a report by Ambit Capital on why bulls could be in for a disappointment, and yet any ensuing correction will be a good opportunity to invest in equities.
“With investor sentiment increasingly factoring in unrealistic expectations regarding the scale of the NDA’s victory, we believe that there is a growing risk of a correction in the market in the days following the announcement of the General Election’s results. Such a pullback in the market should give long term investors a window to invest rationally in India.”
And here’s why.
“Of the eight elections that India has seen since 1984, seven have produced positive stockmarket returns in the two-year period following elections (1999 being the only aberration and one that can be blamed more on the dotcom bust than on domestic factors). Even more spectacularly, the average one-year and two-year post-election returns for the Sensex are 46% and 27% respectively. Now, since the Sensex’s 30-year CAGR (1984-2014) has been 16% and since the two-year post-election CAGR is 27%, simple arithmetic suggests that the two years following the General Elections have driven close to 80% of the Sensex’s returns in the last 30 years.”