General Elections 2024: How different poll outcome scenarios will impact equity, forex and bond markets
Outright BJP victory: Nomura expects positive market reaction particularly if NDA gets close to 400 seats. Domestic sectors particularly financials, consumer discretionary, industrials/infrastructure and PSUs will outperform.
IT services and healthcare are likely to underperform.NDA victory: The brokerage expects a sell-off in highly valued domestic-oriented sectors, particularly industrials, infrastructure, and PSUs. It sees banking, consumption, and pharmaceuticals outperforming.I.N.D.I.A victory: Nomura expects a sell-off across most domestic-oriented sectors particularly financials, industrial/infrastructure, consumer discretionary, and PSUs.
Consumer staples, IT services, and pharmaceuticals are likely to outperform.Outright BJP victory: As per the brokerage, Rupee should rally if Nomura's base case of an outright BJP victory materialises, as the market’s focus is shifting to less-favorable scenarios.“We believe such an outcome would be positive for INR, as it should alleviate recent market concerns over a possible less-favourable election outcome. It would mean PM Modi continues to lead, and the positive macroeconomic and policy prospects would remain largely intact.
Although we expect positivity for local markets through foreign portfolio inflows and selling of USD/INR following the exit polls, this could be limited by the market waiting for the actual election results on 4 June to confirm the extent of the NDA majority. We believe there is still some scope for spot USD/INR to move relatively quickly towards the 83-figure (the lower end of ranges over the past eight months) before this is likely to be met eventually with RBI FX accumulation.
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