Most exit polls on Saturday, June 1, said the NDA alliance could win 350-370 seats this time. While the actual results could differ from the exit poll predictions, experts say it is highly unlikely that a non-NDA government will be formed at the Centre.
Also Read: Poll of Polls: 10 exit polls predict 350+ seats for BJP-led NDA, three 400+; INDIA bloc to get less than 200 seats
The Indian stock market experienced high volatility last month due to the Lok Sabha election. While most experts expected the NDA to retain power at the Centre, the market was nervous amid speculations that the ruling alliance might not secure a strong majority. With exit polls indicating a solid majority win for the NDA, the stock market appears to have shrugged off election-related jitters.
Also Read: Exit Poll 2024: How to trade keeping Lok Sabha Election results in mind?
Experts are optimistic about the Indian stock market’s medium—and long-term prospects. Some, however, expect some profit booking after the sharp gains in the market.
Overall, they find the Indian market poised for growth due to strong macroeconomic fundamentals, political stability, and expectations of an above-normal monsoon.
Also Read: Stock market today: Nifty 50, Sensex hit all-time highs. Exit polls 2024 to GDP data – 4 reasons why market is soaring
Let’s explore the insights from top experts on the exit poll results and their outlook for the Indian stock market:
Dhiraj Relli, MD & CEO, HDFC Securities
According to most pollsters’ exit poll predictions, the NDA alliance could end up with 350-370 seats, enough to form the government for the third time.
This number aligns with the median forecast ahead of the exit polls. However, it is almost the same as that in 2019 and short of the alliance’s 400+ target.
Psychologists are at their best when analysing exit polls. The actual seat count on June 4 may be a little different.
Also Read: Exit Polls 2024: Modi-led NDA poised for third term with 350-370 seats; what should investors do next?
Unless we get a surprise in the balance exit poll predictions, Indian markets may not react majorly to these numbers on a closing basis.
In any case, the disappointment or euphoria may settle down in a couple of days, and the focus may shift to the policy announcements in the new government’s first 100 days.
The fact that the BJP could return to power is good for continuing and ACCelerating the reform process.
This outcome was mainly on the expected lines. Hence, after the initial excitement, markets may wait for the new path set out by the latest government.
If the NDA does not get 400+ seats, some fundamental reforms requiring constitutional amendments may be challenging to implement, but a lot can still be done with this kind of majority.
Infrastructure, BFSI, capital goods, telecom, etc., could be the key beneficiary sectors, but the forthcoming Budget will throw more light on sectors that could lead the next rally.
Above normal monsoon can cheer the rural economy, which may benefit the FMCG sector.
Also Read: Indian Stock Market: Exit polls sentimental positive for capex stocks, says Jefferies; likes TVS, Coal India, ONGC, ACC
Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Exit poll results, which indicate a clear victory for the NDA with around 360 seats, completely remove the so-called election jitters which have been weighing on markets in May. This comes as a shot in the arm for the Bulls. Large caps in financials, capital goods, automobiles, and telecom are likely to lead the rally.
The bulls will be further emboldened by the better-than-expected 8.2 per cent growth in GDP numbers, which came after market hours on Friday.
Technically and fundamentally, the market is poised for a rally.
Also Read: With political stability secured, no worry for the economy: IIFL’s Nirmal Jain
Chakrivardhan Kuppala, Cofounder and Executive Director, Prime Wealth Finserv
With six exit polls predicting a clear victory for the BJP-led NDA in the 2024 Lok Sabha elections, market sentiment is expected to get a significant boost.
This wave of optimism could push the Nifty 50 index up by 5-7 per cent in 4-6 months. Historically, when political stability is assured, we’ve seen a notable uptick in investment activity.
After the 2014 elections, equity mutual fund inflows increased by about 15 per cent within six months as investors felt more confident about the economic outlook.
The mutual fund industry, which has enjoyed an average growth rate of 12 per cent over the past five years, is likely to thrive even more with this renewed investor confidence.
This positive outcome will attract more investments, especially in the sector, business cycle, and PSU funds.
Arpit Jain, Joint MD, Arihant Capital
The market is expected to react positively to the upcoming Budget, but there might be some profit-taking after the recent rally.
Sectors like defence, railways, and manufacturing will likely keep climbing, and financials could also join the party. Divestment stocks might also perform well.
Investors might want to consider booking some profits on the current high and wait for a dip to re-enter the market.
The long-term outlook remains positive. In the short term, however, the market might consolidate as everyone waits for the details of the July budget.
The rally has room to extend in sectors like diversified businesses and MNCs. Specifically, we see potential for continued growth in stocks like BPCL and IDBI Bank.
These companies offer diversification benefits, and being MNCs, they might have additional growth opportunities.
Suman Bannerjee, CIO, Hedonova
Market participants are likely to react strongly to indications from the exit polls, with a clear majority for BJP potentially driving a rally in benchmark indices Sensex and Nifty50.
Conversely, a lower-than-expected seat count for BJP may result in increased market volatility and a short-term correction.
Overall, the exit polls will significantly influence market sentiment and trading behaviour as investors adjust their positions in anticipation of the final election results on June 4.
Santosh Meena, Head of Research at Swastika Investmart
Nifty and Sensex have reached record highs following positive exit polls, with much of this optimism already reflected in current market levels.
If the actual election outcome confirms the exit poll results, we could see further gains, with Nifty possibly advancing towards 23,500 and Sensex approaching 77,000.
In the near term, we might observe Nifty 50 consolidation within the 23,000 to 23,500 range. Despite this, the overall trend remains bullish, and Nifty is expected to surpass the 24,000 mark in the coming days after a period of consolidation.
This is supported by the attractive valuations in large-cap stocks and the anticipated increase in foreign institutional investor (FII) inflows into the Indian market following the election results.
Motilal Oswal Financial Services
The victory of the BJP will augur well for the economy and capital markets as it provides stability and continuity in policymaking with a single-party majority government, which will be expected to continue pushing its economic agenda.
With a clear verdict, markets will heave a sigh of relief and return to fundamentals/business-as-usual mode, in our view.
Fundamentally, India is witnessing its own mini-Goldilocks moment with excellent macros (GDP growth of 8.2 per cent in FY24 on the back of nearly 7 per cent growth in FY23, inflation at nearly 5 per cent, both current account and fiscal deficits well within the tolerance band, stable currency, etc.), solid corporate earnings (Nifty ended FY24 with 25 per cent earnings growth and FY25/26 earnings are likely to post 14-15 per cent CAGR), focus on manufacturing, capex and infrastructure creation, and valuations at 20 times one-year forward earnings.
This verdict and consequent political stability and continuity in policy-making will act like the icing on the cake and keep India as the cynosure of all eyes, in our view.
Kotak Institutional Equities
Exit polls for the 2024 Lok Sabha elections suggest a comfortable majority for the BJP-led NDA, led by gains in East and South India and continued dominance in its traditional strongholds.
We expect the equity market to be further energised by the polls (although the numbers are similar to pre-poll surveys), and the government should continue its economic agenda.
Emkay Global Financial Services
Exit polls indicate a comfortable win for the NDA/BJP in elections. While surveys are not the final results, we see near-certainty of a third term for the Narendra Modi government with a simple majority for the BJP on its own (the numbers may change in the final result).
We believe the macro-financial stability and focus on capex, investments and manufacturing should sustain the multi-year bull run in Indian equities.
We reiterate our preference for industrials, materials, and consumer discretionary over financials and IT. We also favour SMIDs (small and midcaps) over large caps, and our Nifty target remains 24,000 for December 2024.
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
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Published: 03 Jun 2024, 12:36 PM IST