The market’s BJP boost | Mint

The market’s BJP boost

With India’s economy also doing well, stock markets have much going in their favour.
With India’s economy also doing well, stock markets have much going in their favour.

Summary

  • Post poll results, a power shift at the Centre in 2024 looks like a much lower likelihood and policy uncertainty is thus less of a worry.

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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