The market’s BJP boost
For markets that tend to look for policy certainty, Sunday’s election results in favour of the Bharatiya Janata Party (BJP) came as a boost. Reacting to the ruling party’s 3:1 sweep of four states, the Sensex jumped 2.05% to 68,865 on Monday, extending Friday’s gain of nearly 1% on the back of exit polls pointing to the BJP faring well and better-than-expected GDP growth.
Election results turning out better for the BJP than what exit polls indicated strengthens the view that the Narendra Modi-led party will be able to brush off anti-incumbency in the Lok Sabha polls of 2024 and retain power with ease, thanks in no small part to the Prime Minister’s very own popularity. A third BJP win with a clear majority in Parliament has acquired the air of a foregone conclusion.
As the party falling short may have meant a spell of policy uncertainty stemming from coalition tugs and pulls, the election tallies offered scenario planners big relief: A power shift now looks like a tail-end likelihood at most. With India’s economy also doing well, stock markets have much going in their favour.
Of course, pockets of overvaluation exist. Yet, barring a big shock, markets look set for broad gains.
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