Even as the Sensex and Nifty reacted to the closely contested elections in Gujarat and Himachal Pradesh, first shedding more than 800 points when the scales tilted in favour of Congress, and bouncing back to gain 250 points when BJP lead, top market voices say that the markets were expecting a more easy win for BJP. In an interview to BTVI, Sunil Singhania said, “ The market was expecting a easy win for BJP in Gujarat & Himachal Pradesh.”
Earlier the expert had pointed out that the elections have generally been important to gauge market sentiments in the near term. “We had some apprehensions and some correction last year predominantly because of the same event and last two-three days we are seeing some optimism again based on the same event. Our view is that these events are important in the near term but last three-four years’ experience has been that these events cause markets to move in a direction only for a very near term,” the expert told ET Now last week.
However, market experts point out that while the outcome will impact the markets in the near term, it is the more fundamental factors such as earnings growth which will be crucial to decide the course of Sensex and Nifty. “Markets will be driven by earnings at the end of the day, even as anticipation builds for the final outcome,” top fund manager, Nilesh Shah of Kotak Mutual Fund told ET Now.
Ajay Srivastava, CEO of Dimensions Consulting told BTVi, “Investors need to stay put in markets; no need to panic; we expect more normalising policy from government in the next 12-18 months.” Vikas Khemani, CEO of Edelweiss Securities said that the poll verdict will be forgotten in a few days. “I do not think this event would be over and in a couple of days’ time, we will forget that and we get back to normal earnings growth, normal way forward, global markets and everything else. I think this event will be forgotten in few days,” Vikas Khemani told ET Now.
Reiterating his bullishness on the Indian market, ace investor Porinju Veliyath said that the state-poll result will not change reforms path. “I don’t think that the state poll verdict will change reforms path; I believe short-term reactions in markets have no value,” Porinju Veliyath told ET Now.
In a recent note, Kotak Securities observed, “Gujarat has a large business community, which has been impacted by demonetization and GST. Along with this, the anti-incumbency is also likely to weigh against the current government. So outcome is expected to be crucial as it is likely to test the popularity of the existing government. Any negative outcome is likely to have a strong bearing on other states such as Karnataka, Rajasthan, Madhya Pradesh and Chhattisgarh, where elections will be held before the 2019 Lok Sabha elections.”