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Below the Perspective on Post-Election Results by Arvind Kothari, smallcase Manager and Founder Niveshaay Investment Advisory

“The recent election outcomes have introduced a new layer of uncertainty into the markets, driving significant fluctuations. In response to the current market conditions, we are closely watching the formation of the new government and the distribution of ministries and portfolios. The appointment of key ministers and their respective policies will provide critical insights into the future direction of economic policy.

In the last two terms, the government heavily promoted capital goods and infrastructure. In the current term, we anticipate a shift towards more populist measures aimed at rural development. Although the extent of infrastructure and capital goods measures might be reduced due to various constraints, we believe that these sectors will continue to receive attention along with rural development. The manufacturing sector is poised to remain a long-term trend, contributing to higher wage rates and, consequently, supporting rural development.

We also believe that green energy and the broader energy transition will continue to receive focus, as it is a global trend. The government has already invested significantly in this area to kick-start private spending. Unless disruptive measures are taken against the enablers of these sectors, we expect them to continue growing. For instance, the government's previous ban on the import of Chinese goods helped domestic industries to flourish. While China's aggressive capital expenditures have previously led to market share losses, the current trend shows a global rebalancing of supply chains, with businesses pulling out of China.

It is always better to be reactive rather than predictive in such market conditions. Therefore, we will adopt a wait-and-watch approach to see how the government's focus and policies develop. While we are vigilant in the short term, our primary focus is on long-term growth and stability.”

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