Even if Modi’s BJP doesn’t get full majority, stock market is not too worried, reveals Raamdeo Agrawal

By: |
Published: May 14, 2019 4:41:17 PM

BJP will retain power, although not with a full majority, but will still form a stable government. This is on what the Indian stock market has pinned its hope from the outcome of the Lok Sabha election 2019, veteran investor Raamdeo Agrawal says.

Stock market wants certainty and is waiting for the May 23 event when the Lok Sabha elections will be out, says Raamdeo Agrawal, co-founder of Motilal Oswal

BJP will retain power, although not with a full majority, but will still form a stable government. This is on what the Indian stock market has pinned its hope from the outcome of the Lok Sabha election 2019, veteran investor Raamdeo Agrawal says. The market participants expect the ruling BJP to continue in power, though with a reduced majority of 245-250 seats in the Lok Sabha, as there is no other alternative to Prime Minister Narendra Modi, Raamdeo Agrawal, co-founder, Motilal Oswal Financial Services, said in an interaction with ET Now. Even then, the stock market is looking at a stable government.

“The market is believing that there won’t be any major disruption after the election results and the current government will come with a marginally reduced majority of 245-250. But even with the reduced majority, the market is looking at a stable government,” Agrawal said.

Also read: Why foreign investors are selling Indian stocks and debt: Global pressure, other key reasons at play

With regard to global pressure because of US-China trade worries, Agrawal said, if the trade conflict prolongs for a long time then it will have huge repercussions on the global trade as at the price and scale China sells, no other country can. However, he also said with the 25% tariff on Chinese goods by US can prove to be an opportunity for many countries including India in the long term, if the hiked tariffs become permanent. But it is hoped that the trade tensions between the two countries will get over and it is very early to comment as to what will happen to India in case there is a deadlock between two superpower economies.

As the foreign institutional investors have been selling Indian stocks and debt since April as compared with March when they bought equities for more than Rs 32000 crore which was unprecedented and took the market to another level, Agrawal said the as there is uncertainty with respect to election outcome and other global factors like rising oil prices and US-China trade worries, the FIIs are still sitting on the fence and waiting for the May 23 event to happen. With regard to DIIs he said they have been cautious since October last year.

“Market wants certainty. FIIs are also sitting on a fence right now as they await the election results. While the domestic investors are very cautious since October last year. If the market corrects itself from here then that will be very good. The market will welcome if there is a smooth transitioning from this government to the new government, if that gets less majority,” said Agrawal. He added that there is a slowdown across sectors which is very confusing right now.  There is a disruption in the smooth credit flow of the system, aversion to lend and therefore a lot of winding up of non-banking financial companies or NBFCs is happening as they want to become safe.

Agrawal expects the next government’s focus to be on job creation which needs lot of efforts on its part and correction of old practices with regard to indirect taxes, real estate industry and other things. As the big changes were made last year like demonetisation and GST, the next phase will hopefully focus on growth which will ultimately help in corporate growth and job creation.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition