How to ride the election result tide?

In last couple of months FIIs have been a net buyer in Indian equity market. There are multiple factors including the Indian growth story backed by a stable government, which has led to this inflow. May 23rd results will definitely have an impact on capital inflow(FII and FDI) which by and large one of the critical factor in deciding the future course. Between the two key political group(UPA and NDA), there is no major economic policy deviation however its better to review your portfolio.

A broad level categorization based cash position of investors:

1. All in stocks- This category belongs to those who are already invested with no cash/minimal cash in hand. Is your stock directly getting impacted due to change in government? If the answer is yes then you need to slowly reduce the exposure to minimize the risk. There will be short term selling pressure on these stocks. Its better to switch to blue chip will have minimal impact as compared to small and mid cap. With the current bull run, a short term correction is expected post 23rd May as the market may have factored a stable government. Booking partial profit/keeping some cash is not a bad idea. Market will provide further opportunities.
2. Fifty-Fifty: You fall under the cautious investor group and are waiting for the market to correct for further investment. Again, you can also revisit the portfolio as stated in point 1. Its better to continue your cash position and look for stocks which are looking good post Q4.
3. All in cash: You fall under the most risk averse lot who expect the worst on Election result day. Keep looking for value buys and stocks which are not going to get impacted by government change.

Disclaimer: Please note that these are personal views of the author. All investors are advised to conduct their own independent research into individual stocks or industries before making any decision. In addition, investors are advised that past stock performance is not indicative of future price action.