Futile to link market movements with poll-related jitters'

The ongoing Lok Sabha (LS) elections in 2024, coupled with the declining voter turnout, have left investors speculating about the election results. NILESH SHAH, managing director at Kotak Mahindra Asset Management Company, shares his insights on these developments, explores whether the initial low voter turnout is causing concern in the markets, and delves into investment strategies against this backdrop during a Zoom call with Puneet Wadhwa. Edited excerpts:

With less than a month remaining before the LS election results are announced, there's speculation surrounding the 'Abki Baar, 400 Paar' ('This time, over 400 seats') narrative. Should this narrative not play out, will markets be in more trouble than they are in?

The markets are currently pricing in the continuation of government and ongoing reforms. Whether this continuity is achieved with over 400 seats in the LS or fewer, I believe it won't impact the markets as long as government continuity is maintained.

For the long-term health of the market, sustaining reform momentum is essential. India has made major strides, transitioning from the 10th largest global economy to a trajectory aiming for the third position.

Having evolved from a mere 'coach' to the world economy, India is now positioned as the engine. However, sustaining this growth trajectory necessitates continuous reforms.

So, why the current nervousness in the markets if there's confidence in the continuity of reforms and government?

The markets have displayed an overly optimistic stance, often preemptively factoring in future events. Despite the US Federal Reserve deferring rate cuts, market sentiment leans towards expecting a cut sooner rather than later.