Diversify Your Stock Market Portfolios to Capitalize on Post-Election Policies: Mahantesh Sabarad

Mahantesh Sabarad, an independent market expert, suggests that a key strategy for investors is to diversify their portfolios as much as possible. He believes that after elections, new government policies will create various opportunities in the market.

Earlier this year, many experts thought the elections would not significantly impact the market because the outcome seemed predictable. However, recent market volatility indicates otherwise. Given the current high volatility, as reflected by the VIX reaching around 24, it’s clear the market is anxious about the election results, which could be risky.

Sectoral Opportunities Post-Elections

Sabarad recommends staying as liquid as possible to take advantage of the market swings expected during the election results and exit polls. He notes that the market’s performance has been relatively flat since the start of the year, suggesting that good opportunities might arise for those who remain liquid.

He emphasizes the importance of diversification, especially post-elections when new policies could favor certain sectors. Even if the current government continues, policy shifts are likely, making diversification a prudent strategy.

When asked about sectors he is bullish on if the current government continues, Sabarad highlights the capital expenditure (capex) theme. He believes capital goods and industrial goods companies will benefit from continued government support for capex. However, he advises caution with defense and PSU companies, noting that defense stocks are expensive and PSU companies have already performed well recently.

Outlook for FY25 Q1 Earnings

Regarding the outlook for the first quarter of FY25, Sabarad points to the importance of the monsoon season. A good monsoon could lead to substantial growth, particularly in the FMCG sector, and boost loan dispersals in the PSU banking space. Unlike the first quarter of last year, which was influenced by the post-COVID recovery, this year’s first quarter is expected to be more stable, leading to volume growth in FMCG and better consumer discretionary spending. He also expects the IT and pharma sectors to start recovering.

On the macroeconomic front, Sabarad notes that the US Federal Reserve will likely continue its tightening cycle but may introduce rate cuts as inflation is currently under control. A potential decrease in global commodity prices could further reduce inflation. However, the upcoming US presidential elections could delay these rate cuts.

In summary, Sabarad advises investors to diversify their portfolios and stay liquid to navigate the upcoming volatility and take advantage of new policy directions post-elections.