Stock markets cheer as Modi’s BJP crosses half-way mark; here’s what brokerages say

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Published: May 15, 2018 11:02:50 AM

Even as the 30-share Sensex zooms more than 350 points as Modi’s BJP takes the lead with nearly 115 seats in Karnataka, global research and brokerage firms  had said that a Modi-led BJP win in the state will be cheered by the stock markets.

Nomura believes that the markets will view the crucial state-poll as a litmus test for BJP’s popularity.

Even as the 30-share Sensex zooms more than 350 points as Modi’s BJP takes the lead with nearly 115 seats in Karnataka, global research and brokerage firms  had said that a Modi-led BJP win in the state will be cheered by the stock markets. The 30-share Sensex zoomed nearly 450 points on Tuesday to hit the day’s high at 35,993, just 600 points shy of an all-time high. Morgan Stanley had earlier said stock markets expect a BJP-led government in Karnataka. The keenly watched election will prove to be crucial ahead of 2019, said CLSA. On similar lines, Nomura believes that the markets will view the crucial state-poll as a litmus test for BJP’s popularity.

Interestingly, a recent UBS report too said that investors are pricing a Modi win in 2019, as the base case, and Karnataka state election outcome will act a near-term sentiment indicator. Analysts and stock market experts expect the markets to rally, in case of a BJP victory in the state.

Vikas Khemani of Edelweiss Securities says that a likely BJP victory will be cheered by the market. “I think any indication that the same government will continue in 2019, the markets will like it. That is what seems to be happening in the last couple of days. Any hypothesis which supports a possibility that NDA government will return, the market will like that. Anything contrary to this and market will not like it and will correct,” Vikas Khemani, President and CEO, Edelweiss Securities told in an interview to ET Now yesterday.

Interestingly, the strong surge in the stock market witnessed this morning maybe an indication of the same. Kotak Securities had earlier said that exit polls indicated a hung assembly in Karnataka. According to the firm, government policies will remain focused on improving rural incomes in the state. 

On similar lines, Vikas Khemani of Edelweiss said that  while the political climate will have rhetorics, he doesn’t expect the current government “I don’t think we will see any material change in the markets, unless BJP is completely wiped out from the state, which is unlikely to happen. Given that it’s the election year, the stock markets will react to rhetorics, however, this government is unlikely to materially deviate from the path of fiscal discipline. The stock market will have to overlook those rhetorics,” he told in an interview to the channel yesterday.

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