Kotak Institutional Equities does not expect a strong upside in the Indian equity markets ahead of General Elections 2024, which are about the kick-off in a week with its first phase of voting. The domestic brokerage believes that there is a limited scorp for election led-positive surprises. According to the brokerage firm, all the positives are baked in the markets and current valuations are lofty, particularly for the sectors and stocks, which build 'narrative' and remain in the focus during the election period. The analysts added that these stocks fail to maintain the momentum or even are hit hard after the election outcome. Kotak Institutional Equities cautioned against using any ‘conclusions’ from previous pre- and post-election market and stock price movements to draw inferences for pre and post-market movements over the next few months. The BJP-led NDA government seems all set to win the forthcoming general elections, it said. Opinion polls show the BJP/NDA as overwhelming favorites to win the 2024 elections, with around 42-52 per cent vote share and average seat projection of 366 seats, suggesting a higher conversion of votes to seats. The opposition is expected to increase its vote-share, but the NDA’s advantage will stay comfortably high, said Kotak. However, different sets of sectors and stocks had performed in the 2014 and 2019 pre-election periods. Also, valuations are much higher currently versus in the pre-2014 and pre-2019 election periods, which has already factored in 'favourable' results (NDA bumper majority) and forcefull post election policies. "Indian equity markets delivered strong returns in the run-up to the past two national elections, with the Nifty50 delivering an 11 per cent return in the two months to the 2014 elections and a 2 per cent return in the two months to 2019 elections," said Kotak. "Election rallies offer limited-period opportunities in ‘narrative’ stocks." In the last one year, BSE Sensex has delivered a return of around 24 per cent, while the Nifty50 has gained more than 27 per cent during the period. However, in the broader market space, the BSE midcap index has rallied 67 per cent, while the smallcap index has gained about 65 per cent during the period of last 12 months. On the other hand, Haitong Securities sees elections as a significant catalyst for stock markets. Prime Minister Modi’s BJP is widely expected to remain in power. Modi remains popular amongst the vast majority of Indians, and the opposition alliance hasn’t proven to be a credible threat, rife with infighting and defections, it said in its note. "We expect interest rates to come down in the second half of the year, on account of the government’s focus on inflation. Core inflation has been steadily tracking downward, while food inflation still remains a wild card. With the likelihood of improved monsoon rains this year, we could see this coming down, bring headline inflation to within the RBI’s comfort zone," it said. India stock markets have been hovering around their record highs ahead of the elections in next few weeks. Market participants expect some consolidation and correction in the Indian equity post June, when the results shall be announced but believe that the dips shall be bought for more upside in the coming months. Haitong remains convinced of the strength in India markets in the long term, and expect to see a strong pick up post elections. "We would recommend looking at any dips as buying opportunities, as valuations are currently at all-time highs. Our preferred sectors are banks, industrials and autos" it added.