Majority of the market participants are factoring in a strong rally at Dalal Street on Monday after a prediction of bumper victory for the BJP-led NDA alliance.
The exit polls results are hinting towards a consecutive third term for Prime Minister Narendra Modi with BJP-led political alliance NDA getting a landslide victory in the general election 2024. Dalal Street experts see this electoral mandate as a big booster for the markets and Indian economy.
Majority of the market participants are factoring in a strong rally at Dalal Street on Monday after a prediction of a bumper victory for the BJP-led NDA alliance, which on average is likely to get 365-plus seats as per the exit polls. If the exit polls estimates come true, or fall mostly in line, the analysts see the political stability and policy continuity to be a big trigger for the bulls.
The exit poll numbers are very strong for the incumbent government and markets may not have priced in such strong numbers and we could see some reflection of that on Monday opening trade, said Narendra Solanki, Head Fundamental Research and Investment Services, Anand Rathi Shares and Stock Brokers. “Overall it’s positive for the markets in short as well as long term,” he said.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that exit polls results which indicate clear victory for the NDA completely removes the so called election jitters which have been weighing on markets in May. This comes as a shot in the arm for the bulls who will trigger a big rally in the market on Monday.
“Largecaps in financials, capital goods, automobiles and telecom are likely to lead the rally. The bulls will be further emboldened by the better-than-expected 8.2 per cent growth in GDP numbers which came after market hours on Friday. Technically and fundamentally the market is poised for a rally,” he said.
Chakrivardhan Kuppala, Cofounder and Executive Director, Prime Wealth Finserv said, “Historically, political stability assures a notable uptick in investment activity. This positive is expected to attract more investments, especially in sector funds, business cycle funds and PSU funds.
The Indian equity market will remain in a bullish trajectory so far in the coming week, said Arvinder Singh Nanda, Senior Vice President at Master Capital Services Ltd.
“As the overall sentiment of the market is bullish hence any correctional fall may be accompanied by fresh buying. Market sentiment ahead of election outcomes tends to be influenced by factors such as political stability, and economic policies of the leading party,” he said.
However, some analysts suggest a word of caution amid the election euphoria. They suggest investors be wary of intense volatility at Dalal Street on Monday ahead of actual results on Tuesday, June 4 and advised to book some profits. If the actual tally does not match the expectations, the headline indices may see some corrections as knee-jerk reactions, they said.
We anticipate that the Indian equity markets will exhibit heightened volatility on Monday, June 3, following the release of exit polls. Market participants are likely to react strongly to indications from the exit polls, with a clear majority for BJP potentially driving a rally in benchmark indices, said Suman Bannerjee, CIO, Hedonova on the exit polls story
Conversely, a lower-than-expected seat count for BJP may result in increased market volatility and a short-term correction. Overall, the exit polls will significantly influence market sentiment and trading behavior as investors adjust their positions in anticipation of the final election results on June 4.
Psephologists are at their best in analysing exit polls but the actual seat count may be a little different on June 04. We also need to check the exact gains or losses in vote share by the two alliances, Unless we get a surprise in the balance exit poll predictions, Indian markets may not react majorly to these numbers on a closing basis, said Dhiraj Relli, MD & CEO, HDFC Securities.
“The disappointment or the euphoria may settle down in a couple of days, and the focus may shift to the policy announcements in the first 100 days of the new Govt. BJP returning to power is good for continuing and accelerating the reform process, which is mainly on the expected lines. Markets, after the initial excitement, must wait out for the new path set by the Government,” he said.
Markets would love it as an initial reaction if these exit polls come to reality on Monday, said Divam Sharma, Founder and Fund Manager at Green Portfolio. “Although a good run up should be used as an opportunity to book profits as we expect some profit booking on ‘buy the rumor and sell the news’ fad,” Sharma added.