Here are 5 things to track for stock market investors post BJP-led alliance’s big win
1) A near-term market rally expected
The resounding victory by the Mahayuti alliance is expected to provide a much-needed boost to the market, which has been under pressure recently due to global headwinds and sustained selling by foreign investors. Most pollsters were predicting a tighter race, but a better-than-expected show by the ruling alliance will be positive for the market.
“The outcomes of the Maharashtra and Jharkhand elections will be crucial triggers. Especially Maharashtra, where the NDA witnessed one-sided victory is likely to boost bullish sentiment further,” said Santosh Meena, Head of Research, Swastika Investmart.
“Maharashtra being the second largest state in the country, a mandate like this from here also reinforces the entire growth story of the country. So, I would think that it would be taken positively and it has come at a time when markets are not at all-time high,” said Palka Arora Chopra, Director of Master Capital Services.
The domestic markets ended the last week on a high note, despite geopolitical tensions and renewed concerns surrounding the Adani group.
2) Continuity in economic policy
The election result in the state is expected to provide political stability, implying a continuity and much decisive economic policy, which will positively impact the investor sentiment.”The stability in Maharashtra will boost investor confidence due to the continuity of pro-business policies, especially after uncertainty following previous coalition shifts,” said Palka Arora.
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3) Infrastructure spending
The Mahayuti victory in Maharashtra bodes well in the medium term as the state suffered due to the fractured political mandate in recent years, with its performance on growth and infrastructure parameters lagging that of most other states, as a result.
With a BJP-led coalition now in office—in both the state and the Centre, consolidated political capital should allow for better focus on state-specific issues, as well as expedite infrastructure spending, which had fallen prey to the political situation.
4) Global factors still matter
Despite a near term, the market will eventually take cues from a host of global factors including US economic data such as PCE inflation, GDP growth rates, and FOMC meeting minutes, which will play a critical role in shaping investor sentiment. Commodities and geopolitical developments will also remain vital factors influencing global market trends.
5) Foreign flows
Foreign investors have been massive sellers of Indian equities over the past two months as they dumped nearly Rs 1.14 lakh crore worth stock in October and just over Rs 30,000 crore in November.
The results will likely have a positive impact on foreign sentiments who will look at political stability at the centre and the state.
“The Modi government has proved its credentials in leading a coalition alliance to victory, which will help strengthen the credentials of the central government for the next five years. Foreign investors would be looking at this as a boost of confidence in the Centre as well,” Ajay Bagga, an independent market expert said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
