Assembly election results 2023: Will the big win for BJP catapult Nifty 50 to 23,000?
The Indian stock market, which closed at a new high on Friday, December 1, is likely to gain further tomorrow (December 4) as Bharatiya Janata Party (BJP) sweeps three out four victories in state elections in Madhya Pradesh, Rajasthan and Chhattisgarh, said market experts.
The Nifty 50, the domestic equity benchmark, achieved new record highs, marking its most impressive week in the past five months. Meanwhile, the midcap index extended its winning streak, closing at a record high for the 15th consecutive session. Among the 50 Nifty stocks, 31 registered gains since the previous record high on September 15, 2023.
The Sensex reached its highest point in 11 weeks, concluding at the peak closing level since September 18. Closing the day at 20,267.90 on Friday, December 1, the Nifty 50 concluded with a rise of 135 points or 0.67 percent.
“The Indian equity market is in a strong bullish mood and is hitting a fresh all-time high. We may continue our momentum and outperform our other global peers. A decisive BJP win will reinforce the consensus view that the party is on the front foot for the 2024 general elections. This will likely add a further leg of the rally to the markets as policy continuity will be viewed as a positive growth shock in the medium term,” said Emkay Global Securities.
However, Anirudh Garg, Partner and Head of Research at Invasset PMS said that the sudden surge in benchmarks are often seen before elections. “ The SENSEX performance data around Indian general elections points to a clear correlation between investor sentiment and the anticipation of stable governance. Before elections, there is often a surge in the market; for instance, SENSEX rose by 18.2% before the first Modi government and an impressive 29.7% before the UPA-2 tenure. This pre-election rally reflects investor confidence in prospective political stability.” Garg said.
Semi-final before 2024 assembly elections
Analysts believe that ahead of 2024 general elections, a clear win for BJP in key states could boost investor confidence and drive the market higher.
“The upcoming state polls are being considered a semi-final before the 2024 assembly elections. A stable political environment could boost investor confidence and drive the market higher. If the election outcome is not favorable, then we can expect a fall of 1-2% in the market, but that will be a buying opportunity as the market will look for the general election in 2024,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.
Analysts also noted that the current rally has had the best feeling among all rallies. It has been the broadest rally in recent memory. Midcaps and small caps led the current rally. New highs despite zero contribution from the top 5 stocks, i.e., RIL, HDFCBANK, ICICIBANK, INFY, and TCS — all these stocks were almost 10–15% away from their all-time high.
In 2023 so far, the Nifty is up 12%, the Nifty Midcap is up 38%, and the Nifty Small Cap is up 46%.
“Post-election, the market’s response is more nuanced. Short-term gains, such as a 3.99% increase after the Modi Government 2.0 results, suggest cautious optimism. Yet, the long-term outlook is robust, demonstrated by significant one-year returns, peaking after UPA-2 with an 81.5% increase, indicating sustained market confidence in a stable government’s policies,” Garg said.
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Updated: 03 Dec 2023, 03:39 PM IST
