BJP’s Astounding Victory In Three States Will Recharge Bulls, Say Analysts
Markets are expected to open on a strong note, some analysts see a gap-up start.
The score is 3-1 in favour of the BJP and the chatter has shifted to how markets will open today. Will the markets open gap up? With the Nifty sitting at an all-time high and the market capitalisation crossing $4 trillion, it looks like (in hindsight) the rehearsals for the celebration began last Thursday and Friday. But the scale of the victory for BJP has caught even the most optimist by surprise.
The BJP has swept the state assembly polls in the three states of Madhya Pradesh, Rajasthan and Chhattisgarh. The last one is a bonus and that has meant a clean sweep in the Hindi heartland.
This is being extrapolated as clearing the uncertainty surrounding the general elections and a setback for the Congress and I.N.D.I.A. alliance notwithstanding the Telangana win.
It is this astounding victory for markets that’s getting the bulls recharged. The platform for takeoff couldn’t have been better. A number of positive cues in the run up to the elections gave the markets a fundamental reason to be bullish. Here are some:
India’s GDP growth for Q2 at 7.6% beats estimates.
Crude oil prices have cooled after OPEC failed to unanimously agree on production cuts.
FIIs have turned net buyers once again.
Strong earnings season.
Lastly, the RBI is undertaking a focused tightening to control excesses in some segments of the banking sector.
Now, to the specifics. Market experts and analysts believe the Nifty will react strongly on Monday, though there are different levels predicted for the benchmarks.
Here are some reactions from market experts that BQ Prime spoke to:
'Investors Want To See Consistency'
Deven Choksey, director, DRChoksey Finserv
Investors want to see consistency of growth and progress in the country. And that is where they want to see higher amount of convincing majority for the current BJP-led government. So, for the 2024 election, the same equation will be played–if the government is giving the consistent focus to growth, certainly it will come into power. And that is where the market is going to attract a lot of new money.
One remains absolutely convinced and positive about the prospects of India’s markets, going forward. Every level is meant to be surpassed, whether it is 20,000, 21,000 or 23,000—all these levels are going to be surpassed in due course of time because the growth in the economy is convincing.
'Nifty Can See Level Of 20,500-20,550'
Rajesh Palaviya, vice president, technical and derivative research, Axis Securities
Market likely to open with positive gap, Nifty can see level of 20,500-20,550, close above 20,550 and extend the rally towards 20,800-21,000.
Further, this rally can extend to general election and we can see Nifty move higher towards 21,500-22,000 on or before general election as the state election outcome shows people's confidence and faith in the current government.
In the year 2023, we can see levels of 21,000-21,200, but 23,000 looks difficult to achieve in 2023, but in long-term it can be achieved.
Nifty levels for tomorrow are 20,500-20,550, with support at 20,200-20,350.
'Mood Will Be Jubilant'
Sudip Bandopadyaya, group charman, Inditrade Capital
Market will take these results in an extremely positive manner and the mood will be jubilant tomorrow. Markets will surely extrapolate and get excited about the general election results. This will also keep the mood buoyant as continuity will be assumed.
Nifty at 23,000 may be a bit of a tall ask as of now but excitement and anticipation will continue.
'Rural Stocks Back In Focus'
Elara Capital
Considering today’s poll verdict, we reiterate our FY24E GDP growth forecast of 7% for FY24E and see growth at 6.5% in FY25E.
Based on the poll outcome and run up to 2024 elections, sectorally, we see rural stocks coming back in focus with the huge spending lined up in these states. Also, oil marketing companies may have further leg up as expectation of pump price cut diminishes materially after today. Health care sector will be in vogue with additional spends/schemes in each states.
Some softness can be seen in capital goods and infrastructure sector, especially roads, as we expect it to bear the brunt in the short run, at least till Q2 FY25, as new order flows are likely to moderate.
'New Year Came Early'
Dipan Mehta, founding director, Elixir Equities
New Year celebrations have come early for Indian markets. Can expect panic buying from Monday as the street prices a BJP hat-trick in 2024.
'FOMO Rally Could Take Nifty To 21,000'
Rahul Sharma, director, JM Financial
We might see a disbelief rally from here as FOMO can take us to 21,000 this month.
Expect support at 19,900 and 20,150. See resistance at 20,400 and 21,000.
Thrust stocks include Bajaj Finance Ltd., ICICI Bank Ltd., LTIMindtree Ltd. and Punjab National Bank.
Stocks that could see a mega shift include IDFC First Bank Ltd., ITC Ltd. and Tata Power Co.
'20,550 Could Offer Some Resistance'
Deepak Jasani, head of retail research, HDFC Securities
The outcome of state election results hints at continuation of uprun in the markets. Having said that, we could see some profit taking at higher levels on end of a near-term uncertainty. If FPIs indulge in large-scale short covering in F&O markets and increase momentum of buying in cash market post these results, Nifty could keep rising at a decent pace, after a couple of days.
Though voters vote differently in central elections and in state elections, this time around, the hope will be of a repeat in Lok Sabha elections.
20,550 could offer some resistance on Monday.