Lok Sabha elections: 'Good time to look at market with downturn to find some good bargains,' says Mark Mobius

Lok Sabha elections: Billionaire investor Mark Mobius on Wednesday said that the time has come to look for diamonds in the dust as the market has fallen multiple points after the Lok Sabha election outcome. Though the stock market indices witnessed a rebound on Wednesday after a major slump on Tuesday, Mobius told the Economic Times today that this might be a good time to look for good market performers that might be available at a discount.  

"From a longer-term point of view, India is still an incredible place. And in fact, it might be a good time to be looking at the market with this downturn to find some investment bargains," Mobius said.

He said that shares of construction firms and suppliers of construction materials are set for recovery and robust future performance. He emphasized the critical need for infrastructure development in India, asserting that irrespective of the governing political party, progress in this sector is imperative.

On Wednesday, the Indian equity markets experienced a robust recovery following a substantial decline on Tuesday. This resurgence was fueled by optimism regarding the formation of a stable government by the Bharatiya Janata Party (BJP) and its allies. Sensex ended at 74,382, rising 2303 points and Nifty gained 736 points to a high of 22,620.

Furthermore, market volatility, as measured by the Volatility Index (VIX), decreased significantly by nearly 30%, closing at 18.89 levels.

In Wednesday's session, bulls mauled bears with investor wealth surging by Rs 13.14 lakh crore to Rs 407.97 lakh crore on BSE. All Sensex stocks ended in the green. IndusInd Bank, Tata Steel, M&M, Bajaj Finance, Kotak Bank and Axis Bank led the gains on Sensex, rising up to 7.75%.

When asked about markets tanking on Tuesday and then Sensex jumped over 2,000 points on Wednesday, Mobius said we may have hit a bottom but investors need to be cautious as a lot would depend on the kind of policies that will be followed by the new government.

Earlier, Mobius, Founding Partner of Mobius Capital Partners, said that when PM Narendra Modi will return to power for a third tenure after the Lok Sabha elections, there will be a major boost to the infrastructure sector. 

"The big question mark is whether he can get a number of seats to change the constitution. I doubt that it will happen at this stage but it could happen and if it does, we will see another big push in India for big changes taking place, particularly in the infrastructure arena," Mobius told CNBC International.

Mobius had said his focus is now on Indian infrastructure-related stocks, hinting at a strong push in the sector. "Infrastructure is going to see a good push going forward."

Mobius had said he has full faith that Indian markets will deliver 14-15% returns over the longer term.  An ace investor himself, Mobius said the Indian stock market can give potential returns over the next three to five years. 

On Tuesday, equity market plunged on Tuesday, wiping out Rs 31 lakh crore in investor wealth as Lok Sabha election trends showed BJP falling behind their expected target and its key candidates losing it in heir stronghold constituencies. Nifty 50 dropped by 1,900 points, Sensex by 6,000 points. Concerns rose over the new government's stability.

The election outcome on Tuesday marks the resurgence of coalition politics from 1989 to 2014, when the ruling government depended on partners for support and effectiveness. Analysts suggest the sharp sell-off was driven by rumors of Prime Minister Narendra Modi's potential replacement or the formation of a new government with Opposition parties and NDA allies.

Following the Wednesday surge in markets, Prashanth Tapse, Senior VP (Research), Mehta Equities said: “The Nifty surged by 736 points to 22620, driven by investor optimism following PM Modi’s victory speech, ensuring political stability and supportive policies. All sectoral indices closed in green, with Nifty Metal (+5.75%), Nifty Auto (+4.7%), and Nifty FMCG (+4.34%) leading gains. India VIX tumbled 29%, signaling reduced market volatility. Top gainers included Adani Ports (+7.29%) and IndusInd Bank (+7.06%), while L&T and BPCL saw marginal losses. For Thursday, maintaining a bullish stance is advisable as long as Nifty stays above 21800, with immediate targets at 22751 and 23111.” 

"The Indian benchmark indices rebounded sharply on Wednesday, recovering from a significant decline experienced on Tuesday following the unfavorable outcome of the 2024 general election. Today’s surge in prices is attributed to positive market sentiment surrounding the anticipated formation of the government after NDA allies confirmed their support for the ruling party," said Arvinder Singh Nanda, Senior Vice President of Master Capital Services Ltd.