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142, 14th Floor, Maker Chambers VI, Nariman Point, Mumbai - 400021

7, Avighna House, 82, Dr. Annie Besant Road, Worli Naka, Siddharth Nagar, Worli, Mumbai, Maharashtra 400018

SEBI Office: Plot No. C4-A, 'G' Block, Bandra-Kurla Complex, Bandra(East), Mumbai - 400051

18B106, 18th Floor, Berger Delhi One, Sector 16B, Noida - 201301

SEBI Office: NBCC Complex, Office Tower-1, 8th Floor, Plate B, East Kidwai Nagar, New Delhi – 110023

Bengaluru

Level 5, No. 501, Prestige Garnet, 36, Ulsoor Road, Bengaluru – 560042

SEBI Office: 2nd Floor, Jeevan Mangal Building, No.4, Residency Road, Bengaluru - 560025

Chennai

Workafella No.10, Uthamar Gandhi Salai, Nungambakkam High Road, Nungambakam, Chennai - 600034

SEBI Office: 7th Floor, 756-L, Anna Salai, Chennai - 600002

Unit No. 701, A Wing, 7th floor, Sunteck Kanaka Corporate Park, Patto, Panjim, Goa - 403001

SEBI Office: 6th Floor, EDC House, Atmaram Borkar Road, Panaji - 403001, Goa

1-111, Raheja Woods 8, Central Avenue, Kalyani Nagar, Pune, MH 411006

SEBI Office: Plot No. C4-A, 'G' Block, Bandra-Kurla Complex, Bandra(East), Mumbai - 400051

Kolkata

916, PS Arcadia, Level 9, 4A, Camac Street, Kolkata 700016

SEBI Office: L&T Chambers, 3rd Floor, 16 Camac Street, Kolkata - 700017, West Bengal

Gujarat

GA-04, Block15, Ground Floor, Pragya Accelerator, Rd 1C, Gift City, Gandhinagar - 382355, Gujarat

2024 Indian Elections & Market Impact

article • Investment Management
Shantanu Bhargava
06 June 2024 | 5 minutes

Optimism is the only reality

No one can plan for the future – much less invest successfully in it – without believing in the future. We don’t advocate hope for the future despite present reality, but because of it. Indeed, we maintain that optimism is the only realism, in that is the only worldview which squares with the facts, and with the historical record of our vibrant economy and our stock markets.

The historical record and statistics show that a diverse economic engine like ours has delivered despite a variety of global and domestic challenges, including political shifts and uncertainty. And we continue to believe that the dynamism of our economy and our unique position in the global economy will allow us to achieve good relative economic growth among the larger economies while also producing above-average earnings growth.

Capital Markets

Markets demand clarity, and we expect market volatility to continue in the coming weeks until a stable functional government is created.

Going into the election season, there was some uncertainty regarding the prospect of capital gains tax changes, which is a major concern for the stock market. And once the general election results are announced, markets will eagerly await clarity on this in July when the next budget is likely to be announced.

Finally, stock prices ultimately reflect corporate earnings and are slaves to them. And India's earnings growth has been strong, with NSE 500 companies reporting a healthy 14% YoY growth. So far, net flows have been favourable, but hereon, market trajectory will be driven by continued good earnings performance.

Money on sidelines/dry-powder

As a house, we had encouraged investors to keep some dry powder (depending on their objectives) given the magnitude of the event risk that general elections pose, and we have avoided FOMO despite the markets' strong performance in recent months. Stock prices currently have both good and unattractive traits.

P/E ratios are moderate to slightly elevated, business profits are substantial, and balance sheets are solid. On the other hand, there are geopolitical concerns and worry over the continuation of the previous government's policies. As a result, we propose to negotiate the transition from a current cash position to a neutral (fully invested) position depending on current and changing market valuations.

This is the most objective way to deploy money in an unpredictable market environment owing to a strong causal relationship between valuations and future returns.

  • If valuations remain stable, allocations can be spread over the next 3-4 months.
  • If prices moderate, deployment can be accelerated.
  • If weakness in markets persists this week, then we advise allocating 25% of dry powder and staggering the remaining.

Existing portfolio composition: equity allocation

As advisors, we focus on capital-preserving tactical shifts. In other words, when prices in certain sections of the market are significantly higher than typical, it is sensible to reduce the allocation.

Based on our analysis of the relative valuations of large versus mid/small caps, we continue to favor large caps. We propose making these tactical tilts inside the stated strategic ranges for each of these market sub-sectors, specifically in the upper and lower bands of the defined strategic ranges.

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Topic of Enquiry*:




How did you discover Waterfield?









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*Kindly note that this form does not operate as a job portal, and the HR Team will not receive information regarding your candidature
Follow Us
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Follow Us
linkedin youtube twitter instagram
Offices

142, 14th Floor, Maker Chambers VI, Nariman Point, Mumbai - 400021

7, Avighna House, 82, Dr. Annie Besant Road, Worli Naka, Siddharth Nagar, Worli, Mumbai, Maharashtra 400018

SEBI Office: Plot No. C4-A, 'G' Block, Bandra-Kurla Complex, Bandra(East), Mumbai - 400051

18B106, 18th Floor, Berger Delhi One, Sector 16B, Noida - 201301

SEBI Office: NBCC Complex, Office Tower-1, 8th Floor, Plate B, East Kidwai Nagar, New Delhi – 110023

Bengaluru

Level 5, No. 501, Prestige Garnet, 36, Ulsoor Road, Bengaluru – 560042

SEBI Office: 2nd Floor, Jeevan Mangal Building, No.4, Residency Road, Bengaluru - 560025

Chennai

Workafella No.10, Uthamar Gandhi Salai, Nungambakkam High Road, Nungambakam, Chennai - 600034

SEBI Office: 7th Floor, 756-L, Anna Salai, Chennai - 600002

Unit No. 701, A Wing, 7th floor, Sunteck Kanaka Corporate Park, Patto, Panjim, Goa - 403001

SEBI Office: 6th Floor, EDC House, Atmaram Borkar Road, Panaji - 403001, Goa

1-111, Raheja Woods 8, Central Avenue, Kalyani Nagar, Pune, MH 411006

SEBI Office: Plot No. C4-A, 'G' Block, Bandra-Kurla Complex, Bandra(East), Mumbai - 400051

Kolkata

916, PS Arcadia, Level 9, 4A, Camac Street, Kolkata 700016

SEBI Office: L&T Chambers, 3rd Floor, 16 Camac Street, Kolkata - 700017, West Bengal

Gujarat

GA-04, Block15, Ground Floor, Pragya Accelerator, Rd 1C, Gift City, Gandhinagar - 382355, Gujarat