Investors cheered the trends indicating the Bharatiya Janata Party’s victory in Karnataka assembly elections with the benchmark indices—Sensex and Nifty 50—putting up their best performances in over a month, with market participants seeing this as a precursor to next year’s general elections.
“The BJP winning Karnataka is definitely a boost to the market sentiment. It also revives hopes of [Prime Minister Narendra] Modi coming back in 2019,” Porinju Veliyath, well-known stock picker and founder and chief executive officer of Equity Intelligence, said. “Trend of selling in mid caps and buying large caps could reverse.”
With most of the states under its fold, BJP now has a clear advantage of implementing “uniform economic policies”, said Deven Choksey of homegrown brokerage KRChoksey. “It’s clearly a big push to India’s economic development when the state and the centre are ruled by people with common agenda, common thought process and policies.”
Modi’s party was just short of a simple majority in the 224-member house, leading in 113 seats compared to 70 leads for the Indian National Congress, according to the Election Commission’s website at noon.
The BJP’s victory in the state election and majority votes for a single party is definitely a positive for investor sentiment, Sudip Bandyopadhyay of brokerage Inditrade Capital told BloombergQuint. “Expect some positive momentum for mid caps and overall market activity for a few days if the BJP wins.”
Karnataka elections is just a trigger, the market had already bottomed at 9,950 and uptrend was in place. 11,400 was always on cards for the Nifty, it’s just a question of when.Jai Bala, Chief Market Technician, Cashthechaos.com
Investors worried about next year’s election will breathe easier, said Saurabh Mukherjea, CEO of Ambit Capital.
Moreover, he said an emphatic win might lead the NDA to throttle back on the farmer-focused pre-election populism that has become the norm in our country over the past decade. That in turn might provide some relief to bond yields which have been rising steadily over the past 8 months, Mukherjea said.
Whilst a BJP win should lend support to equity supports, at these valuations, the direction of the equity market is more likely to be driven by the incipient earnings recovery than by election results.”Saurabh Mukherjea, CEO, Ambit Capital
Here’s what some other prominent market experts had to say about Karnataka election results:
Nilesh Shah, Kotak Mahindra AMC
- Markets to use Karnataka outcome to forecast 2019 polls.
- Markets want stable, reform-oriented government.
- Earnings momentum to drive markets going ahead.
Ajay Srivastava, Dimensions Corporate Finance Services
- Markets happy with stability.
- Age of large caps is here to stay.
- Prefer banks, consumer companies in the portfolio.
Ajay Bagga, Market Expert
- Can see profit booking towards end of the day.
- Expectations were low, simple majority welcomed strongly.
- Would wait and watch for other factors like yields, global cues.
Ritesh Jain, BNP Paribas Asset Management
- Need to run a tighter fiscal policy.
- Need to ensure lower volatility, stable macros for investors.
Vikas Khemani, Edelweiss Securities
- Results in line with expectations.
- Rising crude, interest rates remain a concern.
- Long-term fundamentals looking positive.