Sensex to dip after vote count on May 16, right time to enter the market

The third round of polling for the Lok Sabha (House of People) is taking place in 107 constituencies spread over nine states and two union territories. Even before the polling is held in the next two phases, it is almost certain that the fractured mandate stares the nation.

The next government would formed with the support of regional parties and the Third Front, in which the Communists would play a crucial role.

The Marxist practitioner by book, Prakash Karat, General Secretary of the CPI (M) has made it clear that the party could consider being part of the government and has even indicated taking the support of the Congress to keep the right wing BJP at bay.

But, will it be able to provide a stable government and what kind of economic policies such a coalition follow. That would be paramount in the minds of market watcher.

The Bombay Sensitive Index on Wednesday rallied 3.65 per cent to 11,403.25 points, its highest since Oct. 14 last year. This is seen as short term speculative trading to book profit.

Credit Suisse Group in its report has asked investors to lower their holding as polls may prove to be a “sharp disappointment.”

Perhaps, the bear run in the market after the 2004 polls and the statements by the Left parties on the economic reforms seems to weigh high on the institutional investors.

But, this is perhaps an opportunity for individual investor to cash in on the low value of the blue chip scrips to enter the market with a long term holding.

Those who plan to enter the market following the crash should at least plan a holding period of four to five years as the impact of global economic slowdown would also wean away by that time.

So, it is the right time to enter the market and build the portfolio.