Motilal Oswal Financial Services (c) in a strategy note said the BJP-led NDA is estimated to win 370 seats against 353 seats in 2019, according to the average of all exit polls. It said none of the 12 exit polls are predicting defeat or even a slim majority for Narendra Modi. The lowest number of seats predicted for the NDA is 316 by Dainik Bhaskar, with a range of 281-351, it noted.
"If the actual election results are in line with the exit polls, it will be the first time since the 1960s that an incumbent Prime Minister is returning to power for a third consecutive term with a comfortable majority. The last time this happened was in the 1960s when Jawaharlal Nehru (India’s first Prime Minister) won the Lok Sabha Elections in 1962 (he had also won in 1952 and 1957)," MOFSL said.
Equally, if the BJP wins 325 seats as predicted in exit polls, this would be an unprecedented performance, MOFSL said adding that it would have surpassed its previous tally for the second time in a row after winning 282 in 2014 and 303 seats in 2019, highlighting the pro-incumbency trend.
The political ramifications, if BJP wins seat wins mirror exit polls, will be far-reaching.
"It will once again reaffirm the political supremacy of Brand Modi, who for the third consecutive time, has not only won a comfortable majority but has also kept its key opponent, i.e., the Congress party at a fraction of BJP’s strength in Parliament (Congress had 1.8x of BJP’s seats in 2009, but succumbed to just 16 per cent of the BJP’s total tally in 2014 (44 vs. 282) which, after ten years, will now improve just a bit to 20 per cent (65 vs 325), if Exit Poll predictions come true). It will result in further marginalization and organizational weakness in opposition parties, which have seen significant attrition and churning in their ranks in the last few years," MOFSL said.
MOFSL said the after-effects of this massive pro-incumbency verdict may also have spill-over impacts in the next round of State Assembly Elections i.e. Maharashtra and Haryana in October-November 2024.
Also, it may also result in further shifts in equations in political alliances, e.g., in Maharashtra, MOFSL said.
"The magnitude of this victory will also boost the political capital of PM Modi/BJP in pushing through tough legislative agenda such as Uniform Civil Code, One Nation One Poll, Re-introduction of Farm Laws, etc. We note that, right after winning the 2019 elections in May’19, BJP had abrogated Article 370 from the Constitution in August 2019, one of the very important political steps and core agenda of the BJP since the inception of the party," it said.
MOFSL said the victory of PM Modi and BJP would augur well for the economy and capital markets, as it provides stability and continuity in policy-making with a single-party majority government, which will be expected to continue pushing its economic agenda.
"Equity markets displayed some anxiety and nervousness recently around the impending political uncertainty, which resulted in a sharp rise in volatility in April and May 2024. With this clear verdict, markets will heave a sigh of relief, in our view, and go back to fundamentals/business-as-usual mode. Fundamentally, India is witnessing its own mini-Goldilocks moment with excellent macros, solid corporate earnings (Nifty ended FY24 with 25 per ecnt earnings growth and FY25/26 earnings are likely to post 14-15% CAGR), focus on manufacturing, capex and infrastructure creation, and valuations at 20x one-year forward earnings. This verdict and consequent political stability and continuity in policy-making will act like an icing on the cake and keep India as the cynosure of all eyes, in our view," the brokerage said.
MOFSL said its portfolio remains aligned with the key domestic cyclical themes amid a consistent backdrop of earnings growth. The broking firm remained overweight on financials, consumption, industrials, and real estate. Industrials, consumer discretionary, real estate, and PSU banks are our its preferred investment themes.
It likes large caps such as ICICI Bank, SBI, L&T, Coal India, M&M, Adani Ports, ABB, HPCL, and Hindalco Industries. Among midcaps, it likes Indian Hotels, Godrej Properties, Global Health, KEI Industries, PNB Housing, Cello World, and Kirloskar Oil.