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Investing in the Stock Market: Get Your Fundamentals Cleared First

The Indian stock market experienced wild swings following the unexpected LS election results. Amid the highs & lows of the stock market, explore if now is a good time to invest. But before you decide to invest, learn the fundamentals of the stock market.

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Swati Dayal
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The Indian Stock Market is swinging between highs and lows amid unexpected election results. In the past few days, the Indian stock market has experienced significant volatility due to the Lok Sabha Election 2024 Results. On Tuesday, June 4, a sharp selloff wiped out all of Monday's gains as early trends indicated a tighter race than exit polls had predicted. This unexpected development caused panic among investors, reducing their wealth by approximately Rs 26 lakh crore in intraday deals, bringing the market capitalization down to around Rs 400 lakh crore from Rs 426 lakh crore in the previous session.

Indian Stock Market: Record Rally Followed by Plunge

Just a day earlier, on Monday, the market saw its biggest single-day rally since January 2021. Investors were optimistic due to exit poll results suggesting a third consecutive win for the NDA. The Sensex surged by 2,507.47 points, or 3.39%, closing at 76,468.78, while the Nifty 50 rose by 733.20 points, or 3.25%, settling at 23,263.90.

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Election-Induced Market Anxiety

Elections often generate market anxiety due to perceived policy uncertainties, significantly impacting both the market and the economy. The relationship between election results and market performance is crucial, particularly for long-term investors. Historical data shows increased market volatility preceding elections, attributed to the uncertainty surrounding future policy directions.

Despite the election-related turbulence, brokerage firms remain optimistic. Morgan Stanley's report indicates that the pace of reforms is unlikely to slow down, emphasizing that most future reforms will focus on execution rather than law changes. Citi highlights that the government has fiscal flexibility for social spending, with an additional fiscal space of 0.35% of GDP (Rs 1.2 lakh crore) available for FY25.

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Influences on the Market

The market's performance is influenced by several factors. Decisive election outcomes often lead to short-term market gains due to investor preference for policy predictability. Conversely, political instability, marked by frequent government changes, can negatively impact the market. Historical patterns suggest that market volatility tends to decline after elections as the political landscape becomes clearer.

A Good Time to Invest?

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Given the current scenario, some analysts believe this could be an opportune time to invest. The recent volatility may offer buying opportunities for long-term investors, especially with the anticipated stability post-election. The optimism from brokerage firms about continued economic growth and reforms adds to this positive outlook.

While the Indian stock market has seen highs and lows over the past few days due to election results, the long-term outlook remains favorable. Investors should consider the potential for future stability and growth, making this a potentially good time to invest.

Before diving into the stock market's ups and downs, it's crucial to understand the basics. 

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Fundamentals vs. Technicals - Which One's Right for You?

Uncover the Secrets of Invsting in Stocks 

Ever wondered if you should rely on fundamental analysis or technical analysis for stock trading and investing? This is a common question among market participants, and in this video, Bharti Joshi, a SEBI-registered research analyst and the driving force behind ABJ FinStocks, will shed light on the key aspects of both approaches. Explore the basics of stocks, how their prices move, and the factors that influence these movements.

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For investors, a blend of fundamental and technical analysis is beneficial. But what if you are new to both? The simplest method is to focus on strong index stocks like Nifty 50 or BSE 30, which generally have robust fundamentals. Invest during market corrections and diversify across industries to build a solid portfolio and achieve good long-term returns.

Beginner’s Boost: Resources to Get You Started with Stock Analysis

To embark on your journey of stock analysis, start by exploring the key ratios and indicators that are essential for both fundamental and technical analysis. Equip yourself with the right resources and tools to make informed decisions and maximize your returns. Dive into this video to unlock the secrets of stock trading and investing, and discover which analysis method suits you best. Watch Video.

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