I am not one to forecast what will happen in the elections. But
here are my thoughts of what to do post elections results are announced:
If we get a stable
and reformist government (remember that AAP did not seem to be reformist in
Delhi) – Even though most of India’s economic problems are long term and cyclical
in nature and will need more than 12 months to effect any change, the direction of
government policies will make the stock market bullish. It would be easy to pick investing ideas – most ideas will be
profitable and it would be difficult to make mistakes.
If you are below 45 years of age and/ or are open to higher
risks in your portfolio – I would recommend Mid and Small cap mutual funds – the top three
funds that I would recommend are:
As you can see, these funds are already giving great returns
for the past one year (that is because they underperformed till 2012).
If you are in the 45 plus age bracket and / or do not want
to take large risks in your portfolio – then it would be prudent to invest in
the Large cap mutual funds –the top five funds ones that I would recommend are
I have in the past recommended MF’s that are focussed on
Pharma Industry and IT industry – their performance will be limited as they are already over valued stocks. So I would recommend that you move your
money out of the Pharma and IT focussed funds and move them to either large cap or small cap or
a mix of the two depending on your age and ability to take risks.
In we get an unstable
government – a fractured mandate resulting in formation of a government
with support from larger number of regional outfits can be bad for the Indian
economy. The
FII’s will be cautious and will not pour in money into India - our stock markets will not be bullish and
there will be pressure on the Rupee to devalue further.
If you are below 45 years of age and/ or are open to higher
risks in your portfolio – it would be good to stay with Pharma industry focussed
funds - my old recommendation stays
If you are in the 45 plus age bracket and / or do not want
to take large risks in your portfolio – then I would recommend that you exit
the market and wait for some time in the side lines - there will be investing ideas that will
emerge – but for the time being be cautious.
