The market will take some time to absorb the unexpected election results. Stability will return to the market soon but volatility will continue till there is clarity on the cabinet and the key portfolios. A sharp rebound in the market is unlikely in the near term but sectoral preferences might change. Sectors like FMCG, healthcare and IT will find increasing preferences and the momentum plays will slowdown.
One positive of the sharp market correction is that the excessive valuations have moderated a bit and this will facilitate institutional buying once clarity emerges on the formation and composition of the cabinet.
Investors can start nibbling at high quality largecaps in IT, financials, autos and capital goods.
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