Exit Poll 2024: How to trade keeping Lok Sabha Election results in mind?

Stock market today: The frontline indices surged during early morning deals in response to the Lok Sabha Election 2024 results. Most of the Exit Polls predicted a third term for the Narendra Modi government, which ended on Saturday last week. The Nifty 50 index opened upside and touched a new lifetime high of 23,338, whereas the BSE Sensex hit a new peak of 76,738. The Bank Nifty index surged for the third straight session and touched a new record high of 50,990 within a few minutes of the stock market's opening bell. This rally, according to stock market experts, is due to the upbeat mood of market bulls after the exit polls predicting BJP-led NDA's victory. However, they cautioned that the current rally is just a euphoria as one should remain vigilant about the actual Lok Sabha Election results. They emphasized that NDA's victory means continuing the government policies, but BJP winning less than 400 seats would mean a dent in the fundamental reforms requiring a constitutional amendment. They also advised traders to avoid overenthusiasm as clarity of the new Government is an essential factor that one should keep in mind while taking a fresh trade position on either Monday or Tuesday. They recommended long-term investors to wait for more clarity as the Union Budget 2024 still needs to be presented.

Triggers for the Indian stock market today

Commenting on the current rally in the Indian stock market today, Dhiraj Relli, MD & CEO at HDFC Securities, stated, "The possibility of the BJP returning to power bodes well for the continuation and acceleration of the reform process. This outcome was largely anticipated, so the markets might, after the initial excitement, adopt a wait-and-see approach for the new direction set by the latest Government." He further added, "If the NDA fails to secure 400+ seats, implementing some fundamental reforms that require constitutional amendments could be challenging. However, there are still plenty of opportunities with this kind of majority."

Also Read: Nifty 50, Sensex hit record highs after exit polls predict BJP-led NDA win

Amit Goel, Co-Founder & Chief Global Strategist at Pace 360, said, "The exit polls yesterday are predicting a favourable scenario for the Indian markets, with the NDA expected to secure around 350 to 360 seats when counting concludes on June 4th. We anticipate Indian equities to rise over the next 3-4 days, with the Nifty reaching a new all-time high this week. We expect the Nifty to reach approximately 23,200 to 23,300 levels during this period. Additionally, we foresee India's 10-year yield reaching 6.9% and ₹appreciating at 82.75."

As the market reacts to the Lok Sabha Election 2024 results, The expert from Pace 360 suggests investors to seize the opportunity on Monday, June 3rd. They particularly recommend focusing on PSEs, defence, and infrastructure companies. In the long run, they maintain their belief that Indian equities are the largest bubble in the history of global equity markets. They anticipate the Nifty to correct down to 18,000 levels by October 2025. Therefore, they advise investors to book profits when the Nifty surpasses 23,000 and gradually reduce their exposure to Indian equities.

How to find a value pick

On the possible value picks for higher returns, Aditya Gaggar, Director of Progressive Shares, said, "All the sectors will move in tandem with the Frontline Index, and sustainability at the higher levels will be a key factor to watch out for. We remain bullish on the Auto, Metal, OMCs from the Energy space, PSU & PSE."

Dhiraj Relli of HDFC Securities said that sectoral infrastructure, BFSI, capital goods, telecom, etc, could be the key beneficiaries. Still, the forthcoming Budget will highlight sectors that could lead the next rally. Above normal monsoon can cheer the rural economy, which may benefit the FMCG sector, reiterating the potential benefits in the market.

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.