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 The results of five state elections have provided a major booster dose to the markets and saw them building on the rally which was already underway.

The BSESENSEX in the three days post the results has rallied 2,172.54 points or 3.22 per cent to close at 69,653.73 points while NIFTY has rallied 669.80 points or 3.30 per cent to close at 20,267.90 points. This present five-day rally could end in a day or two. The moot question is whether this is a bigger move or just a short rally.

This appears to be much more and should remain so till the mid of the elections in April-May 24 at bare minimum.

The mood has been set and one should expect optimism in the markets till the outcome of the results. The current mood would favour the present disposition at the centre and they would be in pole position to return for a consecutive third term. This does not suggest at any point of time, that the rally would be one sided or unidirectional. There would be corrections, many of them sharp and different stocks moving at different times in different directions.

The fact that FPIs were negative on the Indian stock markets and were sellers over the last few months, will be another positive for our markets. Take for example their net purchases on Tuesday in the cash market were at Rs 5,222 crore even while domestic institutions sold shares worth Rs 1,400 crore. In the first three days of December 23 their net purchases were at Rs 8,900 crore while net purchases in the whole of November were at Rs 5,800 crore.

Economic indicators continue to give credence to the fact that India has weathered the storm and is set on the growth path. GDP numbers, GST collections on a month-on-month basis, inflation and the fact that interest rates too seem to have peaked out, indicate the possibility that the country has weathered the storm.

I believe the rally that would play out over the next six months would be all about India and India. Domestic manufacturing, make in India, consumption, meeting the aspirations of its people, infrastructure growth and making the country better equipped to tackle its issues of growth and supply. Making the country suitable to face the competition from the world.

The capital markets would have a great role to play and expect the steady flow of companies to tap the capital markets on a regular basis. While our markets from a valuation perspective are certainly not cheap, it’s time to differentiate between the men and the boys. Stock selection will be important and one will have to be patient in the quest to make money.

The easy part which was the momentum is over and now would be the grind. Different stocks move at different times. If I were to hazard a guess which may be too early, expect about 8-12 per cent returns over the next six months from hereon.

In conclusion, ride the rally which will help India achieve many milestones in its economic growth and prosperity.