Impact of BJPs Seat Wins on the Stock Market: What Winning Above 290 or Below 240 Could Mean?
Introduction
Both domestic and international events influence the stock market’s performance. The elections are one such event. A nation’s future social, political, and economic development is determined by its election results. The Indian stock market, in particular, is highly volatile during the election period.
Historically, election results have greatly impacted market movement. For instance, the market saw a decline when the BJP lost in 2004. The market spiked when the Congress party resumed power in 2009. Similarly, in 2014, expectations from Modi’s leadership triggered a pre-market spike.
The 2024 election results are also expected to impact market movements significantly. Many investors like you are trying to understand what should the next trading move be. Based on the outcome, many will adjust existing positions or take fresh ones.
Before understanding the different ways in which the market will react to the number of seats the BJP wins, you must learn how the elections affect the stock market.
How do elections affect the stock market?
Elections bring in large volumes of uncertainty and are one of the most volatile periods for the stock market. The impact of political events like legislation changes or elections is as significant as that of economic changes. Generally, if the election result is positive for the current administration, the stock market will gain strength since the result indicates political stability. However, there are many exceptions to how the elections impact the stock market.
The manifesto of the running party, the government’s ideology, and the results of the exit poll also impact the stock market movements. If the exit poll supports the current party, it will indicate political stability, and the stock market will rise.
What will BJP’s win above 290 or below 240 seats mean?
According to the Global brokerage firm, Bernstein, there are four possible scenarios based on the number of seats won by the BJP in the ongoing Lok Sabha elections. The effects these scenarios have on the stock market will vary.
- If the BJP secures above 290 seats, it will promote ‘Mission: India 2047.’ An immediate market rally is expected, followed by short-term profit booking. Chances of Nifty witnessing low double-digit or high single-digit returns this year also exist.
- If the BJP attains victory in 260 to 290 seats, the stock market will rein in the capex drive. There will be mild profit booking in the near term. Nifty’s returns are expected in the high single-digit.
- If the BJP gets 240 to 260 seats, it will be a ground shock. While Nifty can see high single-digit returns in the year, there will be moderate to heavy profit booking immediately after the results.
- If the BJP wins less than 240 seats, it will trigger the return of populism with heavy profit booking in the near term. The market is likely to show negligible to low returns this year.
The market returns are mostly expected to remain in the high single digits. There may be a fluctuation if a change in government leads to a significant policy update. Bernstein also highlights that the continued focus on manufacturing and capital expenditure can boost market performance even amidst the slowing momentum.
Open Your free Demat Account in just 5 minutes!
Which sectors will lead the market?
If the Narendra Modi-led BJP wins, Bernstein predicts exceptional performance for specific sectors. These include manufacturing, financials, infrastructure, state-owned enterprises (PSUs), and domestic cyclical sectors. On the contrary, a lag is expected in the consumer and IT sectors. The performance of small and midcap stocks is predicted to beat large caps briefly after the election results.
Conclusion
The general elections will impact the stock market, with varied effects based on the number of seats the BJP wins. However, you must also realise that the country’s economic future depends on several factors, like government policies, inflation trends, monsoon patterns, and business profits. The broader economic fundamentals will affect the post-election market much more than the election results. You must watch out for the exit poll results and evaluate the broader perspective before making investment decisions.
Trending Blogs: Invest in Small Cap & Mid Cap Mutual Fund & Stocks | Companies affected by Rise in Crude Oil Price | Fall in IT Stocks | Launch of 4 New Indices | Revised Lot Size of Nifty Contracts | ITC Share Surge After BATs Block Deal | Impact of RBI Circular on Currency Trading | RBI’s New Lending Guidelines | Electric Air Taxis in India
Related Articles:List of NSE Holidays 2024 | List of BSE Holidays 2024 | How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account
Popular Stocks: ICICI Bank Share Price | HDFC Bank Share Price | CDSL Share Price | UPL Share Price | TCS Share Price | BHEL Share Price | Trident Share Price | IRFC Share Price | Adani Power Share Price
