Nirmal Jain says market rally has legs, money sitting on sidelines

Most market participants were not expecting a majority verdict for the NDA like the exit polls are projecting. Plus ,a lot of short positions existed as well. Some even didn’t rule out the possibility of a coalition government.

Which is what triggered the monster rally and biggest move in the market in a decade, says Nirmal Jain, Chairman of IIFL Group. “Hopes of a stable government are nudging people to jump into the market right now,” said Jain, a market veteran.

He said India can be a big beneficiary of the US-China trade war and can also be a recipient of a large capital flow, which is sitting on the sidelines, looking for a stable government and right opportunities to bet on the Indian economy.

Jain said while select economic data is pointing towards a slowdown, but if one were to go by ground indicators like full capacity operations of hotels and airlines, there is a missing link there.

Jain believes if the market has to go higher from here on, the rally needs to get widespread, as people would start assessing valuations of good midcaps and park their funds there. He expects the market rally to get more broadbased from here on.

The NDA government implemented a fair amount of reforms in its first term, and Jain believes that momentum will continue as the government has learnt a lot of lessons as well on policy initiatives and how to implement them more smoothly.

Jain said corruption has reduced a lot at the top level and in several cases it has disappeared completely. The government should now try to implement its unfinished agenda if it comes to power for the next term and the fruits of a lot of hard work done in the previous term will be visible over the next five years.