The course seems to be set for a liquidity driven market rally. Evidently, the markets seem to be betting on a clear, decisive, electoral verdict. This does not mean that the verdict will be just that. Elections are innately unpredictable and the only way to play them is by either betting on the near-term trend or on what happens long after the near-term trend ends. To follow or not follow the trend is indeed an individual choice.

But, one thing is clear. If the trend sustains until the verdict, the gains from the trend will be mouth-watering. While these gains may not sustain as we saw in 2014, they will be too significant to miss. The corollary to this is, that stocks which gained hugely in the recent past may well underperform during this phase of liquidity driven markets. The indices will steal a temporary march over active investing.

This also brings us to a reprise of the better part of 2018. Actually, one gets an eerie sense that it could even be worse than that. Only a shock election result can stop that from happening and few are willing to stick their neck out on that. But investors must believe in active investing now and focus on choosing competently. Making those investment choices is becoming increasingly difficult and that is why FIIs are pushing more into the indices. But, domestic investors are smarter and this phase is a test of their skills.

Decisions made now should deliver significantly over the medium term.

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