With Karnataka going into the much keenly-watched elections, market participants have been eyeing the outcome as these elections will be a litmus test for Narendra Modi’s BJP (Bharatiya Janata Party) before the 2019 Lok Sabha polls.
With Karnataka going into the much keenly-watched elections, market participants have been eyeing the outcome as these elections will be a litmus test for Narendra Modi’s BJP (Bharatiya Janata Party) before the 2019 Lok Sabha polls. Earlier this week, the global investment banking firm UBS said that Karnataka state election will be a near-term sentiment indicator of the political environment. Ahead of the Karnataka Elections 2018 scheduled on Saturday, the headlines indices Sensex and Nifty finished the week at their respective 3-month highs.
Narendra Modi’s Chief Ministerial candidate B S Yeddyurappa and Rahul Gandhi-supported Siddaramaiah (present CM of Karnataka) will fight it out in polls on Saturday, 12 May 2018, while the results will be announced on Tuesday, 15 May 2018 (Karnataka Elections 2018 result date).
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If Narendra Modi-led BJP loses Karnataka Elections 2018, it will be a big blow to the NDA (National Democratic Alliance) before the 2019 general elections. According to Mustafa Nadeem, CEO, Epic Research, the domestic equity markets including the benchmark indices Sensex and Nifty will face a shakeout situation if Modi’s BJP loses election battle in Karnataka polls 2018. Further, the markets may see a February-like correction in the event of BJP’s loss, Mustafa Nadeem says.
“It will bring in a kind of a shakeout situation that will take out some weak players and medium term players out of the market. If this happens, we may see a continuation of correction like we have witnessed in February 2018,” Mustafa Nadeem said to FE Online.
However, the impact would be limited and may be a good opportunity for long-term investors, he added. “But this impact should be limited to 10-15% where we see some value coming in for long-term investors,” Mustafa Nadeem said.
On Friday, a day before Karnataka Elections 2018, the BSE Sensex closed 289.52 points or 0.82% higher at 35,535.79 after touching a day’s top of 35,596.15 whereas NSE Nifty surged 89.95 points or 0.84% to conclude at 10,806.5 after making a day’s peak of 10,812.05.
Earlier in the beginning of this month, Prime Minister Narendra Modi kickstarted the election campaigning with back-to-back three rallies in a single day. While addressing the people in the rally, Narendra Modi said, “It is not a BJP wave in Karnataka but it is a BJP storm.” Way back in Karnataka Elections 2013, out of the total 190 seats INC (Indian National Congress) won 119 seats (62.63%); BJP grabbed 42 seats (22.1%) while JD (s) managed to gather 29 seats (15.26%).
This interview was originally published on 11 May 2018 on www.financialexpress.com