Various political party flags, including All India Trinamool Congress (TMC) party, Bharatiya Janata Party (BJP) and the Indian National Congress party are displayed for sale at a store in the New Market area of Kolkata, West Bengal, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

Why Marcellus Investment’s Pramod Gubbi Thinks Election Is A No-Event For These Companies

The election verdict may not impact some Indian companies with strong fundamentals and earnings growth, according to Pramod Gubbi, co-founder of Marcellus Investment Managers.

“Elections by and large have become a non-event because in the long run stock price returns emerge from earnings growth,” Gubbi told BloombergQuint. A lot of companies, he said, have delivered quality results irrespective of the political party or policy regime. “Ultimately, earnings is what will weigh on the stocks.”

The Indian equity market is impacted by a global market slowdown, including geopolitical tensions in the Middle East and trade war between the U.S. and China, among others, Gubbi said. “Indian election dwarfs out in the larger scheme of things. It’s one of the many factors to consider.”

Key Highlights:

  • Focus on investing in companies that deliver irrespective of the macros.
  • Market leaders tend to perform better even during adverse policy regimes.
  • Demand and supply aspect impacts markets in the short term.
  • Structural aspect of consumption should not be written off.
  • Significant foreign inflows came to India from February this year.
  • Creating new jobs is very important for any government.

Gubbi expects the new government to work towards bringing structural reforms, particularly land and labour reforms, to boost investments.

Watch the full interview here: