Benchmark stock indices Sensex and Nifty on Monday hit a fresh record high, with the BSE market capitalisation (m-cap) hitting Rs 4,00,00,000 crore mark, as Lok Sabha 2024 elections draw near, with the BJP-led incumbent government at Centre seen winning adequate seats to seal a third term, thus raising hopes of policy continuity. A stock market rallying in the run-up to elections is not unusual .
"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," said Haitong International in a note.
The phase-wise Lok Sabha elections will start on Friday April 19 and conclude on Saturday, June 1. Results are all likely on June 4.
On Monday, the BSE Sensex climbed 448.07 points or 0.60 per cent to 74,696.29. The 30-pack index hit a record high of 74,713.66 intraday. The NSE Nifty hit a high of 22,652.05. It was later trading at 22,643.60, up 0.58 per cent. This was the third straight day of gains for the largecap indices.
The domestic market was on an upswing post-GFC coupled with confidence in PM Manmohan Singh’s government at that time. In 2014, PM Modi’s BJP-led NDA swept into power with a strong business and reform agenda that gave the markets their impetus.
"In 2019, the BJP remained in power as expected, though with a much stronger showing than predicted. Markets remained elevated post the elections, but then quickly dropped to pre-election levels before soaring once again," Haitong International noted.
Motilal Oswal said the expectations of political continuity after the forthcoming Lok Sabha Elections 2024 should bolster the overall economic momentum further, with a focus on infrastructure, capex and manufacturing occupying the center stage.
"With size and growth in its wings, India’s capital markets are truly poised to embrace the Amritkaal going forward," it said.
ICICI Securities suggested that Nifty bottomed out in the first quarter of the calendar year (March quarter), followed by rally (minimum 14 pr cent rally from lows) towards General election outcome in each of seven instances over past three decades.
In the current scenario, it expects index to maintain the same rhythm as index has already undergone corrective phase in the first quarter and formed a higher base. "Thereby, setting the stage for next leg of bull rally towards 23,400 by Election outcome. Our positive bias is further validated by following observations," it said on April 4.