Gujarat elections take a center stage on Dalal Street. It was a bumper market rally on back of exit polls -- though the indices did come off the highest points of the day.
However, now all eyes are on the actual numbers that will come out on Monday and if or not they will tally with the numbers thrown by in the exit polls.
The market in the week gone by faced many variables, like Fed rate hike, crude going to USD 65/bbl and then back to USD 63/bbl, global cues, and advance tax numbers.
According to most experts, market in the near-term gas priced-in Gujarat outcome, assuming exit polls are right.
To tell us what all this means for the market going forward, CNBC-Tv18 spoke to Andrew Holland, CEO, Avendus Capital Alternate Strategies and Mitessh Thakkar of mitesshthakkar.com.
If the exit poll results for Gujarat and Himachal Pradesh are right then it is like a vote for Prime Minister Modi and his reforms process, particularly in Gujarat, said Holland, adding that this is what the foreign investors will take cues from -- continuation of a strong government, he added.
However, if polls are wrong then it will be a huge negative shock for the market, he said.
As of now, market seems to have priced-in the poll outcome, said Holland.
According to him, even if the real results are as the exit polls suggest then market would turn to global cues and as long as they are positive, market may test new highs.
However, market is still driven by liquidity and that is a bit nerving, he said, adding that until some trigger takes the global markets down, we will continue with this happy Goldilocks scenario and get into the Christmas spirit and market may see a reasonable run towards end of the year.
For 2018, he would remain more optimistic on earnings growth and that is what will hold markets up despite global cues that could take markets down in the short-term, said Holland.
So, for the very short-term still nervous with liquidity driven market but medium-term more enthused by global growth in world and earnings growth in India, he said.
Going forward, maybe the market may face few more difficult weeks like the current one until we get the catalyst, which fundamentally moves the market higher and that has to be earnings growth, said Holland.
He said as of now, the house is 45-50 percent hedged.
Next year if the government as promised were to spend more on rural and infrastructure then it would be good catalyst for economy. It is likely that earnings could growth around 15 percent, said Holland.
The house would continue to stick to their strategy of playing private banks, FMCG and affordable housing along with selective autos and auto component players, he said.
For full discussion, watch video
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