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Action will begin in Indian stocks and currency markets as the countdown will begin starting with exit polls and then the final results on Thursday. About $10 billion have come in betting on Narendra Modi coming back to power. Will they be proved right? We spoke to Vijay Valecha, chief investment officer at Century Financial to find out more.
#IndiaElection2019 #India #Modi #UAE #GulfNews #Indian #election
See more videos at https://gulfnews.com/videos
Action will begin in Indian stocks and currency markets as the countdown will begin starting with exit polls and then the final results on Thursday. About $10 billion have come in betting on Narendra Modi coming back to power. Will they be proved right? We spoke to Vijay Valecha, chief investment officer at Century Financial to find out more.
#IndiaElection2019 #India #Modi #UAE #GulfNews #Indian #election
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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.