Nifty 50 continues its wild swings; how should investors play this volatility?

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Lok Sabha Election results 2024: What does lack of BJP majority mean for market, economy? Foreign brokerages weigh inThe wild swing in the market was mirrored by the volatility index, India VIX, which plunged 15 per cent on Monday, surged 28 per cent on Tuesday, and then fell 29 per cent on Wednesday.While government policies can shape economic outlook and market dynamics for the long term, historical trends show election outcomes are short-term triggers for the market. Experts believe there may be some shift on the policy front after the new government is formed, but they do not see a material impact on India's macroeconomic landscape.Also Read: A weaker mandate for NDA may trigger a shift in policies, but the macro backdrop may not change materially: Emkay GlobalWhile no major impact on the macro parameters is expected, the market is expected to closely observe government policies and the Union Budget in the near term.Rahul Singh, CIO - Equities at Tata Asset Management, believes the election result may lead to a more balanced market."Risk-reward in large caps and underperforming sectors like banking and consumer appears more favourable.

On the other hand, there is likely to be greater scrutiny and valuation discipline in the performing sectors like capital goods, power, defence and manufacturing," said Singh."The macro parameters will likely remain largely stable and provide downside support to valuations. The key points to watch going forward would be the tilt of government policy and the Union Budget," Singh said.Manish Chowdhury, the head of research at StoxBox, believes that after the election outcome, there may be no drastic changes in the economic policies of the BJP-led NDA government in the third term.