Amid the ongoing political battle in the country, even as voters in Gujarat and Himachal Pradesh elect their ruling party top market experts say that the results could have bearing on Sensex and Nifty. In an interview to ET Now, Sunil Singhania of Reliance Capital said that the stock markets could be impacted if the outcome is different than the consensus expectations. “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,” he told the channel.
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.”
While the markets will maybe impacted in the near term, such events generally don’t have a long-term impact, as investors will focus more on corporate earnings growth and the overall economy, says Sunil Singhania.
According to media reports, the betting market, or the satta bazaar as it is commonly called, sees BJP retaining power in Gujarat. At least Rs 500-600 crore worth of betting has so far taken place on the outcome of the state election, according to an ABP Live report. The betting market has sees BJP taking away 107-110 seats and the Congress winning 70 to 72 seats. According to a Times of India report, the punters’ prediction of BJP’s victory may become correct, but the betting market is not ready to play high risks.
“We do not expect a win by Modi to move the markets up or have too much of an upside based on this news alone but a loss and upset from BJP could take the markets lower. Because a loss for them here could mean that the next election that the majority that they hold in the center might be questioned,” says Nikhil Kamath of Zerodha.