The primary concern in the Indian equity markets right now revolves around the outcome of the ongoing elections for the Lok Sabha, India’s lower house of Parliament. Key questions include how many seats the Bharatiya Janata Party (BJP) will secure, how many its allies will win, and whether Prime Minister Narendra Modi’s party will maintain its majority in Parliament. In the 2019 elections, the BJP won 303 seats on its own, with the National Democratic Alliance (NDA), which it leads, securing a total of 352 out of 543 seats.
Despite a general consensus predicting that Modi will secure a third consecutive term as Prime Minister, there remains uncertainty about the margin of victory. This uncertainty has caused some anxiety in the markets, with concerns that a potential shift in power could lead to changes in policy.
Raamdeo Agrawal, Chairman of the Motilal Oswal Group, a Mumbai-based financial services firm, is confident that the BJP will win with a comfortable majority, possibly exceeding their 2019 seat count. He noted that betting markets, known for their independence, predict the BJP will win around 310 seats on its own. Agrawal shared his insights in an interview with CNBC-TV18, suggesting that market participants have a clear expectation of the election outcome based on current discussions.
The polling, which began on April 19, has completed six out of seven phases, with the final phase scheduled for June 1 and results to be announced on June 4. Exit polls, derived from voter surveys at polling booths, will be released on June 1 by the conducting organizations. Agrawal mentioned that political insiders are likely already aware of the exit poll trends, as they receive ongoing updates throughout the polling process.
Market expectations tied to the election results include predictions such as JPMorgan’s, which forecasted that the Nifty50 index could reach 25,000 if Modi’s BJP secures a third term. Hiren Ved, Director and Chief Investment Officer at Alchemy Capital Management, expressed that the specific number of seats won by the BJP is less important than the continuation of their current policies. Richard Harris, Chief Executive at Port Shelter Investment Management, also anticipates a third term for Modi, stating that a change in government would be a market upset, given that governments typically maintain their course in a third term unless under significant stress, which the current administration is not.
