Dear Investors,
The popular stock market adage goes, “Sell in May and go away” based on the concept that equity markets witness strong growth in the period between November and April each year. While the verification of this adage continues to remain under debate, we believe that for our mutual fund investors it means very little. For investors who are looking to create wealth over the long-term through investments in mutual funds, what matters is spending time in the market rather than trying to time the market.
Which brings me to the most important event impacting markets and making headlines domestically and globally – the Indian General Elections 2019. Elections for the 17th Lok Sabha in the world’s largest democracy is underway and the world, along with the country, is watching with bated breath.
Markets are also similarly monitoring the elections closely and emotions of marketmen are on a roller-coaster ride. Up one day and down the other, markets are swinging heavily in either direction driven by sentiments. As investors, it is easy to get carried away and take knee-jerk reactions based on the market’s movements and its commentary around the elections. However, investment decisions should be taken looking at long-term prospects in the market and not short-term market movements. Whatever be the outcome of the elections, one thing we all can always count on is India’s growth story. Our economic policies over the past 20 years have remained stable irrespective of the party that forms the government at the Centre. Over the long-term, we have no doubt that betting on the growth prospects of a developing country, with tailwinds such as ours, will reap rich benefits for all investors.
Therefore, through the election period and after it, dear investors, we urge you to maintain your cool and not get frazzled by all the noise surrounding the elections. Markets have historically been volatile pre- and post-elections. However, our study of the markets in the last four election cycles (an election cycle is defined as 6-months before and after the elections, therefore a one-year period) shows that the equity market has generally given positive returns*. This, we believe, should be good reason for all investors to sit tight with their investments.
As for the elections, results will be out on May 23rd. Till then, and even after that, keep calm and stay invested.
Happy Investing.
Warm Regards,
Ashwani Bhatia
Managing Director & CEO
