Assembly election results 2023: Analysts feel that a convincing victory for the BJP in key states ahead of the 2024 federal elections might improve investor confidence and propel the market higher.
According to market experts, the Indian stock market, which finished at a fresh high on Friday, December 1, is set to rise further tomorrow (December 4) as the Bharatiya Janata Party (BJP) sweeps three out of four victories in state elections in Madhya Pradesh, Rajasthan, and Chhattisgarh.
The local equities benchmark, the Nifty 50, set fresh highs, marking its most remarkable week in five months. Meanwhile, the midcap index extended its winning streak, setting a new high for the 15th time in a row. Since the previous record high on September 15, 2023, 31 of the 50 Nifty stocks have gained. The Sensex achieved its highest level in 11 weeks, ending at its highest level since September 18. On Friday, December 1, the Nifty 50 finished the day at 20,267.90, up 135 points or 0.67 percent.
“The Indian equity market is in a bullish mood and has reached a new all-time high.” We might maintain our momentum and exceed our worldwide peers. A strong BJP victory will confirm the widespread belief that the party is well-positioned for the 2024 national elections. “Policy continuity will be viewed as a positive growth shock in the medium term, adding another leg to the rally,” said Emkay Global Securities.
However, Anirudh Garg, Partner and Head of Research at Invasset PMS, stated that a dramatic increase in benchmarks is common prior to elections. “Data from the SENSEX around Indian general elections show a clear correlation between investor sentiment and the expectation of stable governance.” The market generally rises before elections; for example, the SENSEX climbed 18.2% before the first Modi government and 29.7% before the UPA-2 period. This pre-election rise reflects investor optimism about future political stability.” Garg said.
Semi-final before 2024 assembly elections
Analysts feel that a convincing victory for the BJP in key states ahead of the 2024 federal elections might improve investor confidence and propel the market higher. “The upcoming state elections are being viewed as a prelude to the 2024 assembly elections.” A stable political environment may increase investor confidence and propel the market higher. If the election results are unfavorable, the market may decline by 1-2%, but this will be a buying opportunity as the market prepares for the general election in 2024,” said Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd.
Analysts have highlighted that the current rise had the best vibe of any rally. It was the largest rally in recent memory. The current surge has been headed by midcaps and small caps. New highs despite zero contribution from the top five stocks — RIL, HDFCBANK, ICICIBANK, INFY, and TCS — all of which were within 10-15% of their all-time highs. So far in 2023, the Nifty has gained 12%, the Nifty Midcap has gained 38%, and the Nifty Small Cap has gained 46%.
“The market’s reaction is more nuanced post-election.” Short-term gains, such as a 3.99% increase following the results of the Modi Government 2.0, indicate cautious confidence. “However, the long-term outlook is strong, as evidenced by significant one-year returns, peaking after UPA-2 with an 81.5% increase, indicating sustained market confidence in the policies of a stable government,” Garg said.
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