The election results 2014 are far ahead of all the exit poll expectations. Post 1984, this is the first time a single party is getting almost absolute majority. This is extremely positive structural move for the potential returns in the equity markets. It is also positive for a potential drop in interest rates over the next 18 months. Hence, it is extremely important for investors to consider investing in equities.
Currently, domestic investors are extremely under-invested in equities and we believe they should allocate to equities even today. We believe that banking, infrastructure and mid-caps are likely to outperform the large caps, which does not mean that large caps will not be in a position to give returns. With regards to fixed income, investors should consider moving out of all defensive fixed income products to much more aggressive ones.
