Markets should move up to 7,200 if there's a 5-10% swing: Sandip Sabharwal

In a chat with ET Now, Sandip Sabharwal shares his views on the market outlook post the 2014 Lok Sabha elections.

ET Now: Do you think the big upside for Indian market may not come on 16th of May because for the moment if I map how stock prices have moved, PE multiples have expanded and earnings have not really bottomed out or the uptick has not started. Do you think the next big rally or next leg of appreciation for Indian markets will only come when policy reforms kick in?

Sandip Sabharwal: If we get a decisive verdict on 16th, then there will be an uptick for sure and it will be a significant uptick till the end of this month and then the reality will start setting in; in terms of how the actual growth is going to revise.

ET Now: What could be the quantum of upside? Let us say if NDA gets a decisive mandate, 270 plus, somewhere in the region of 270 to 280, will that be a 10 per cent swing event for Indian markets?

Sandip Sabharwal: My guess is that it could be between 5 and 10. Whether it will be 10 or not, I am not very sure, but on the swing, we should see the markets move up to maybe 7200 odd.

ET Now: Anything less than 230, a 5 per cent cut or more than 5% cut?

Sandip Sabharwal: More than 5 I think, more than 10 maybe.

ET Now: So what does one do then, 10% here, 10% there?

Sandip Sabharwal: Stay out.

ET Now: But is it advisable to come back on 17th of May or let us say come after 16th of May if markets have appreciated. You would have missed best of the gains?

Sandip Sabharwal: I do not think so because the risk would have gone down substantially. There will be a huge risk reduction if there is a decisive mandate because then you can look at a five-year story and you do not have to look for tomorrow.