Lok Sabha elections 2024: The stock market has stabilised of late, even as fear gauge India VIX continued to climb ahead of the outcome of ongoing general elections on June 4. The recent comments by the Union home Minister Amit Shah and the Prime Minister Narendra Modi have allayed market concerns a bit.
Analysts said rising India VIX ahead of elections is in line with historical trends. They said Nifty could reach fresh highs in coming weeks and are largely positive on banks, capital goods and automobile stocks.
ICICIdirect said Nifty has historically corrected 6 per cent during polling phase in past four elections and three times hit new highs around election outcome.
"In current scenario, the index staged a rebound after correcting 4.5 per cent from life highs. Over 70 per cent of Nifty constituents indicate further upsides at current juncture. Banking, capital goods, Oil & Gas, Power, Auto and FMCG heavyweights are indicating bullish undertone," it said.
"The negative trigger of sustained FII selling seems to be over as FPIs turned buyers last Friday. PM Modi has hinted about a sharp rally in the market after June 4th. The market is likely to move ahead before the election results since the market is smart enough to anticipate the results," said VK Vijaykumar of Geojit Financial Services.
Vijaykumar said banks, two-wheeler makers, capital goods companies, real estate developers and pharmaceutical companies have come out with impressive set of Q4 results and their prospects, too, look good.
"Watch out for these sectors since they are likely to lead in an election results-related rally," he said.
HDFC Securities also feels the market is preparing for a big move after the important political event.
Analysts noted that major global indices are at life highs. While the domestic market is ignoring such cues, once general election-related anxiety settles down, strong global setups would act as tailwind for further market direction, ICICIdirect said.
PL said a continuation of policies, if NDA comes back to power, could mean themes around infrastructure, defence, capital goods, new energy and tourism etc will continue to do well. Consumer, two-wheeler and tractor stocks can get a boost from green shoots in rural demand and expectations of normal monsoons, it said.