D-St eyes sensex rally as exit polls predict NDA win

MUMBAI: Markets are expected to start the new trading week on an upbeat note after all exit polls for the just-concluded Lok Sabha election predicted the return of the BJP-led government at the centre.
Market players said it would be interesting to see how foreign funds – which have been major sellers of Indian stocks in the run-up to polls – behave, given that it’s almost certain that govt will continue with its policies that are at various stages of implementation.Investors, both global and domestic, prefer certainty about policies and markets to put in place long-term investment strategies.

The victory of BJP-led govt at the centre would augur well for the economy and the capital markets since “it provides stability and continuity in policy-making with a single-party majority govt, which will be expected to continue pushing its economic agenda,” a report by Motilal Oswal Financial Services said. This, in turn, could prompt market players to concentrate on trading and investing, and not divert their attention to govt’s policy initiatives.
According to V K Vijayakumar, chief investment strategist at Geojit Financial Services, the exit poll numbers completely bust the so-called election jitters, which have been weighing on the markets in May and would trigger a big rally in the market on Monday. “Large-caps in financials, capital goods, automobiles and telecom are likely to lead the rally,” he said.
He added that the 8.2% GDP growth number for the Indian economy for FY24 that came after markets closed on Friday could be an additional booster for the bulls to take the leading indices higher, he said.
On Friday, ahead of the last leg of the seven-phase general election and exit polls on Saturday, the sensex had closed at 73,961 points while Nifty had settled at 22,531. The indices are more than 2% down from their life-high marks. On Monday, the sensex had peaked at 76,010 points while Nifty had hit a record at 23,111.
Once poll-related factors are absorbed by the market, investors’ focus will shift towards capex, govt spending, valuations and earnings growth, said Prashanth Tapse, senior VP (research) at Mehta Equities. After the formation of a new govt, the street will (start focusing on the) Budget, which would give cues about India’s policy initiatives for the next five years, which could eventually elevate corporate earnings, he said. According to Motilal Oswal Financial Services, its model portfolio is aligned with key domestic cyclical themes amid a consistent backdrop of earnings growth. “We remain overweight on financials, consumption, industrials, and real estate.”