Political climate in India is so hot as the biggest event in 2019 is the Lok Sabha elections for India. As per the pre-polls results, it is been partially confirmed as winner is BJP and if so, Narendra Modi will be again the leader of the nation.
Both the two major national parties BJP and Congress will make big promises. The mainstream media is active in every corner on India picturizing every piece of political drama and gossip.
Now, based on the flow of
information in medias on results day, which is May 23rd, 2019,
people start reacting, celebrating and much more. Even in the stock market also
activities will be seen so authentic to trade as huge volume of money will be
pumped in.
Existing scenario, Modi has initiated many activities which are connected via small
medium to large scale companies. Hence, BJP/Modi winning matters to traders.
The history of impact of Results around the world is same, the stock markets either Gain Massive of Loose Drastically. Here is the data of past Indian election outcome in Trading.
Among all the sectors, Nifty and Derivatives trader will be very active. Commodities too will be largely active; equity investment may reach its ultimate volume level. Also, Sensex CAGR return of 16 per cent over a 10-year time horizon proves that equity as an asset class has the potential to deliver best performance in the long term. So, obviously long-term investments will be seen in the market.
How do we en-cash this 2019 Election Results?
Specific to 2019, the recent volatility on pre-poll results had already given enough confidence to stock market investors.
- The various strategies are applied and one among them is Swing Trading in Derivatives. Here, people choose 2 levels for their trading, one from the CE side and one from the PE. The levels are chosen based on the amount of open interest present in them. Further, trader take positions in both levels and leave it for some time/days. Either one will be in extreme high, whereas the other will be in loss
- On Equity side, this strategy can help to minimize interest rate risk and volatility. The positions to be taken for longer or short term only and not for the intraday. If the intraday response is good, then we may exit them
- Some of the companies respond for elections are Dr Reddy’s Laboratories, Bharti Infratel, Reliance Industries, UPL and Cipla, HDFC, HDFC Bank, Maruti, SBI, REC are few. We can pick most invested Indian companies for the election-based trading
- Keeping an eye on Days Top Losers and Gainers may help you in picking the company
- Moneycontrol CNBCTV18 Channels also list companies to invest
RISKS Involved in Trading for Election!
When huge activities are happening the impacts also very dynamic in market, few key notes to keep in mind are detailed below.
- May months Monthly contract’s expiry is on May 30th, means another 7 days left, it means we cannot hold much longer time in derivatives
- Do not take positions for weekly expiry levels
- Safe to hold Equity however always buy lower quantity so we can average next time if required/if market is downside
- Always invest partially in any segment so we may get chance to average and exit in future
- If you are holding equity shares then you need to be aware that the half a financial year reporting will be happening around the world and global lead countries like USA and EU countries, they impact too.
- Be connected regularly to global markets impacts
To conclude, this 2019 election results are BULLISH to me, whoever trading must be cautions and if you are left with any companies in portfolio from long time then this is the time to exit them. Wait for your investment recovery and exit, let’s not look for profits from them. New investments to be carefully chosen.
Good Luck to All.