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Sensex rises 46% in 16th Lok Sabha's tenure; analysts see volatility ahead

According to available reports, the productivity of the 16th Lok Sabha stood at 83 per cent (till February 6), above the 63 per cent in UPA II and marginally less than than 87 per cent in UPA I

Puneet Wadhwa  |  New Delhi 

The brokerage said that domestic flows may not be enough to protect India from any global sell-off, especially in large-caps. It added that analysts' estimates of a sharp earnings bounce-back doesn't give a true picture of growth concerns

The tenure of the 16th that began business on June 04, 2014 and saw Narendra Modi assume charge as India’s 14th Prime Minister ended on Wednesday. The country will now gear up for general elections that are scheduled for April/May 2019.

According to available reports, the productivity of the 16th stood at 83 per cent (till February 6), above the 63 per cent in UPA II (United Progressive Alliance II) and marginally less than 87 per cent in UPA I.

The markets, too, gained ground with the S&P BSE rallying nearly 46 per cent during the tenure of the 16th Lok Sabha, data available till February 12 from ACE Equity show. During the last two tenures of the lower house of the Parliament (June 01, 2009 to February 21, 2014 and June 02, 2004 till February 26, 2009), the S&P BSE had gained nearly 40 per cent and 82 per cent, respectively.

Among stocks, Minda Industries, Bajaj Finance and KEI Industries are the three stocks from the BSE 500 that moved up over 1,000 per cent since June 4, 2014. Indiabulls Ventures, Aegis Logistics, Phillips Carbon Black and Caplin Point Laboratories, HEG and Avanti Feeds zoomed 700 per cent to 970 per cent during this period.

On the other hand, (RCom), Jaiprakash Industries, Reliance Power, Suzlon Energy, Dena Bank, Indian Overseas Bank, Reliance Infrastructure, and Syndicate Bank lost 81 per cent to 97 per cent during this period, ACE Equity data available till February 12 show.

Going ahead, analysts expect the to remain volatile till the outcome of the general elections is known.

“With the general elections around the corner, one can expect the volatility to only increase going forward. We continue to prefer private banking space. With most of the non-performing assets (NPAs) being accounted for and resolution coming in for most cases, we remain positive on this sector. HDFC Bank and Axis Bank continue to be some of our preferred picks from this segment,” says Hemang Jani, Head - Advisory, Sharekhan by BNP Paribas.

Analysts at Kotak Securities, too, echo a similar view and expect the to remain choppy for the next three-four months and suggest investors stock to the large-caps.

is likely to be range-bound till election outcome and then see a directional move on either side after the election results. Expect defensive sectors to continue their outperformance. Fast moving consumer goods (FMCG) and consumption-related stocks, along with Information Technology (IT) and few agriculture / rural plays will continue to draw investor interest. We prefer ITC, Marico, Britannia and Colgate Palmolive in the space and HCL Technologies, L&T Infotech and Tech Mahindra in the space,” said Amit Agarwal, an analyst with Kotak Securities in a recent report.

First Published: Wed, February 13 2019. 15:52 IST