00:00We are not political pundits. We don't want to, you know, take sides in terms of NDA versus UPA.
00:04But we want to build scenarios, basically scenarios of what if NDA comes and what if
00:09the rest of the others come, that is the UPA comes.
00:11Today we interviewed Vijay Valecha. He's the CIO,
00:14Chief Investment Officer of Century Financial, which is based in Dubai.
00:18As we're entering into a very exciting week with election outcome schedule on Thursday,
00:23in exit polls starting as early as today, we're going to have an interesting week on
00:27Indian stock markets. Vijay Valecha said there'll be massive volatility in markets
00:31starting this week. But the caveat here is that in 2014, all the exit polls got it horribly wrong.
00:40So given this caveat, people are going to brace themselves and see where to put their money this
00:45week. We're actually expecting a really, really volatile week. I mean, it should be one of the
00:49most volatile weeks for India in the last three years, actually. Nifty has been actually one of
00:54the most calmest sectors if you actually look at it across the world. Last year was a volatile
00:58year for the rest of the world, but Nifty was quite calm. What we're really expecting is that
01:02the exit polls do come out. If the exit polls are conflicting, the volatility increases.
01:07If the exit polls are in line with the NDA coming in, it should not be a problem.
01:11Yeah, and that's what pretty much FIIs have been betting their money on, right? There have
01:15been net buyers in the market compared to a net seller last year. However, domestic institutions
01:21have been net sellers. So what's playing out there? Are foreigners more betting on a Modi win
01:28this time? So FIIs actually do believe that the NDA comes in much more stronger. And domestic
01:32markets, domestic players are actually believing that the NDA has a much lesser majority than they
01:37had last time. Domestically, they actually have been selling LIC, the major player, has been
01:41selling since the last three months. So they have been on a non-stop selling spree. That could
01:45probably continue if the NDA does not come in. Well, HR thinks that maybe FIIs are very
01:51early in this particular rally. Remember that there have been net buyers in the start of the
01:55year with inflows of about $17 billion against an outflow of $9 billion last year. Domestic
02:02institutions, on the other hand, have been net sellers in this market. Actually, no need to
02:07come in at these prices when the Nifty is about $11,500. There was no reason for the FIIs to
02:11enter. Just looking at the large caps, the valuations are extremely overvalued. And there's
02:15absolutely no reason why they should be entering the market so early. I mean, if the NDA does come
02:19in, seeing the new policies, looking at the speeds, they should have entered at that time.
02:23So that just suggests as in how vulnerable the market is. Because as we have divided opinions
02:30among analysts and political pundits, similarly, I think investors are also divided on this count.
02:36Investors are divided. There's no doubt about that. In fact, I have spoken to a lot of business
02:39people, myself, when back at home in India, and they're divided between themselves. Some of them
02:44actually just don't want the NDA to come. So that's the reason they're betting against the NDA.
02:48Some of them actually want the NDA to come, so they're betting against it. But they're not really
02:52sure of who's going to come in. So this is a really tight election. It's not like the last
02:56one where it was quite one-sided. And we are not political pundits. We don't want to, you know,
03:00take sides in terms of NDA versus UPA. But we want to build scenarios, basically scenarios of
03:05what if NDA comes and what if the rest of the others come, that is the UPA comes. So, you know,
03:10what sectors would you look at? What stocks would you look at if NDA comes out, comes out with the
03:14majority? And what if, in a similar case, what happens to UPA? So the NDA has been in power for
03:19the last five years. The best thing to do is, if the NDA does come in, pick up the winners for the
03:24last five years. Stocks like Reliance, Adani, I mean, you look at the stocks like TCS, Wipro,
03:29all the IT sectors basically are going to do really well. All the mining space is going to do
03:33really well. When the UPA does, or if the mega coalition does come in, it actually does favour
03:39the agricultural sector, it does favour the pharma sector, as well as the metal space a lot.
03:43The metal space, you could look at Tata Steel, it's quite undervalued. Hidalgo is quite undervalued.
03:48Those are good stocks to buy. Would you rather base your opinions only after the election results
03:54are out now? Or would you want to give a target to Sensex, Nifty, irrespective of who comes to
03:59power? I do think that either of the governments do come in without a majority. It should be that
04:04there should be a fall in the market. We could probably expect the Nifty to come down to 10,800
04:09and then probably it should start moving backwards from there. However, that said,
04:13I think the China trade wars is also an important factor to play out. The markets overall in the
04:17world are looking quite shaky, so that could also have an impact on the Nifty. What about if UPA
04:21comes to power, what would your target look like? And what if NDA comes to power, what would your
04:27Sensex Nifty target look like? So if the UPA does come in, the Nifty target for the next three years
04:32should be somewhere around 12,500. But if the NDA does come in, it does favour the markets much
04:37more. So we could actually see a target of around 13,800. Baleja also gave special advice to NRIs
04:43who are basically investing back home. We basically classify these investors into two categories. One,
04:48who have already invested in the market, or the second one, who are waiting on the sidelines
04:54to get a proper election outcome to be back in the market. He says options could be a good
04:59strategy to get into this, irrespective of which government comes to power. Ideally, investors are
05:05long-term investors. I mean, there's no doubt that everybody in this part of the world who is
05:10remitting back home is either investing in shares directly through mutual funds, SIPs,
05:14or investing in real estate. I think real estate is also a very big factor that everybody does
05:18invest in. The most important thing that people should realise is that long-term investment does
05:21not really take into consideration who wins the elections. So when you're actually investing,
05:26you should always look at what companies you are picking up. If you're picking up the right
05:30companies, if you're picking up companies with good valuations, with good managements, I don't
05:34think they should really be bothered about the elections. However, if you're a short-term trader,
05:39you're of course bothered about these. I would really suggest that any short-term traders
05:43should, at this point in this week, try to hedge their positions with options.
05:47As far as Rupee is concerned, Velichar feels that he expects more weakening if UPI
05:53comes to power, and less weakening if Modi comes to power, because market has already factored in
05:59that. The inflows and outflows from the FIIs make a huge difference. So does the NRIs who actually
06:04remit currency back home. I mean, UAE is the highest remitting currency in the world, so
06:09it does really make an impact on the Rupee. Well, the idea is if the UPI does come in,
06:14we should see the Rupee actually falling a little bit. Not too much. We shouldn't see
06:17too much volatility in the Rupee. We should be expecting it to come to around 73, 74 against
06:21the dollar. That's around 21. So that's what we should be expecting on if the UPI does come in.
06:27If the NDA does come in, I think the Rupee has already factored that in. So I think the Rupee
06:31should be very less volatile if the NDA does come in. So that was the exciting interview. As they
06:35say, the proof of the pudding is in having it. We'll have action starting with exit polls,
06:40and that will culminate into the election results on Thursday. Do watch this space. Do go to
06:46gulfnews.com for more updates. Go to gulfnews.com slash business for more updates on business.
06:53That's it from us and thanks for watching.
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