Indian Sensex and Nifty indexes have been soaring for the past few months. In May 2024, the stock market achieved the great milestone of a $5 trillion market capitalization in just 6 months after hitting a $4 trillion market cap.
In the past, the performance of Indian stock markets have been greatly influenced by India’s political and social atmosphere. Many credit incumbent Prime Minister Narendra Modi’s government for the stock market’s rapid growth in the last few years.
With the ongoing Lok Sabha Elections in India, for which the results to be announced on June 4, 2024, many anticipate the impact the election results will have not just on the Indian political environment, but even on the stock markets. On Monday, the Sensex and Nifty markets hit an all time high but investors concurrently remain cautious.
Also Read: RBI’s Historic INR 2.1 Lakh Crore Dividend Transfer (globalmoneytimes.com)
303 required for stock market to go up
Several brokerage houses such as UBS, Nomura, Bernstein, Motilal Oswal Financial Services, etc. have said that Modi’s re-election would benefit markets. According to a Bloomberg news survey of market participants, Bhartiya Janata Party (BJP) will need to win at least 303 seats in the general election to extend the stock market’s success, which was the number of seats they won in the previous election held in 2019.
Any number of seats above 303 could result in a 3 percent gain in the benchmark stock gauge. Bernstein predicts if BJP wins at least 330 seats, the stock market could see a short term rally that will push Nifty past the 23000 mark. Nomura predicts that the BJP will win almost all 400 seats which would have a positive impact on the Indian Rupee (INR). IT services and healthcare are less likely to perform well, whereas financial and industrial sectors are expected to shine.
Christopher Wood of Jeffries has given a warning that in the event of Modi’s loss, the market could fall by more than 17 percent, but has stated that a BJP loss is ‘unlikely’.
Also Read: India To Become $4 Trillion Economy In FY25: Sanjeev Sanyal (globalmoneytimes.com)
Lower Voter Turnout – Hurdle for BJP?
While investors have confidence regarding return of National Democratic Alliance (NDA) for a 3rd term, many are still doubting whether it is possible for the BJP to win again. This is due to the low voter turnout prevalent among all phases of the elections.
Out of the total 400 seats available, 51 of them are seeing a voter turnout of less than 55 percent as compared to the 2019 polls. Statistics have shown that the voter turnout has generally decreased all across the country in all phases, hence causing many to question whether or not the BJP will be able to secure a 3rd term.
About Author
This Articles has been written by Ms Aditi Abhijit, an Economics graduate from University of Mumbai. Other than having deep interest in Economics and Financial Analysis, she aspires to explore & contribute to the uniform growth and betterment of the Society at large.
