Beware of Uncertainty as India enters Election month

Election season kicks off with the first phase of polling on the 16th April 2009. The first leg of the month long drama will culminate with the declaration of results on the 16th May 2009. The new Govt. has to be sworn in by 22nd May 2009. With the kind of uncertainty about the outcome of the polls, the second leg or the post poll drama may throw up a vitiated atmosphere. As stock markets traditionally do not like uncertainty, volatility on the markets is likely to increase substantially. A reliable measure of volatility 'India VIX' has already gone up significantly, it closed the week at 43.54% after touching 50 in the mid session. This is an indication that the intermediate rally is on its last legs, and investors are advised to book profits/losses. Several stocks have already given 40-50% returns during this month long rally.

The period immediately ahead does not auger well for the stock markets. To quote the famous astrologer Sh. Lachhman Das Madan: "The planetary configurations reveal that no new Constitutional Govt. may be in position by the due date. The atmosphere in the country will be highly vitiated particularly from 15th April 2009 to 22nd June 2009. Serious violence is likely to erupt and militancy may rock the country." Investors may become cautious, and any sharp decline in stock prices during the period will throw up a long term opportunity to accumulate good stocks.