As ruling BJP-led NDA govern government suffered losses in the three key states on Tuesday, investors are expected to move ahead with caution.
As ruling BJP-led NDA govern government suffered losses in the three key states on Tuesday, investors are expected to move ahead with caution. The global brokerages shares a mixed view on how these poll results will affect the equity markets – both positively and negatively.
Here’s what global brokerages say:
A key worry for markets would be if the domestic equity investors that started to invest in markets along with Modi’s win in May 2014 start to reduce new investments, said global brokerage CLSA. These elections results would likely increase fears of an unstable government among retail investors and this could impact market inflows, it added. A slowdown in flows could impact market multiples, the global brokerage further said.
The poll results are the first indicators of how things may pan out in May 2019, Morgan Stanley said. Early signs indicate incumbent BJP-led NDA government suffering some losses but these signals can be fragile in the world of politics, it added. Investors should watch for pre-poll alliance and growth or inflation mix and Maharashtra and Uttar Pradesh are likely to be crucial to the results in 2019, it further said. News flow on alliances should emerge in next three months, the global brokerage said.
The state results are expected to reinvigorate opposition parties, Nomura said. We would be wary of extrapolating these results to national elections and expect talk of a grand coalition to raise political uncertainty, it added.