BJP seat wins: Target '400 paar' not a piece of cake, suggests BT Markets survey 

Will BJP win in Lok Sabha elections 2024 and, if yes, by how big a margin is the key question market participants are asking ahead of the June 4 election results. Ever since the phase-wise elections kick started on April 19, stock market and Satta Bazaar projections for BJP have been lower than opinion polls that gave BJP a probability of 370-410 seat wins, which made stock investors jittery earlier this month, sending fear gauge India VIX higher. Nerves got calmed a bit only after commentaries from the Prime Minister Narendra Modi and the Union home minister Amit Shah, where the two leaders hoped for a strong mandate for the incumbent government and, thus, policy continuity.  

There are still doubts among market analysts over whether BJP's aspirational target of '400 paar' will be met. A Business Today Markets survey of analysts suggested BJP may fall short of the target by a good margin. The closer the BJP seat wins will be, the better would be chances of stock market rising from here on, analysts said.    

The seventh and final round of voting will take place on June 1 and the election counting is scheduled for June 4.  

Nikunj Saraf, Vice President at Choice Wealth said one has to see how much impact the lower voter turnout can have on BJP prospects. "I believe the target of crossing 400 seats will not be a piece of cake for NDA as the anti-incumbency has built in the last 10 years -- NDA touching or marginally cross its last election numbers will be a good unbiased judgement, as this time I-N-D-I-A alliance have great grip in southern parts and other regional geographies," Safar said. 

That said, Saraf believes the market seems to have discounted the same, as seen in the recent spike in volatility. In 2019, BJP won 303 seats. The Narendra Modi-led party had won 282 seats in 2014 under the 'Modi wave'.  

Ravi Singh, Senior Vice-President for Retail Research) at Religare Broking said the formation of a BJP-led government appears likely, although the market sentiment will be heavily influenced by the number of seats it secures. 

"Based on the current market trends, it appears that there is a strong expectation of a BJP victory, which reflects a high level of confidence in their ability to maintain leadership continuity. It is crucial to recognise that regional political dynamics and changes in voter sentiment may bring about uncertainties to these projections," he said.

Amnish Aggarwal, Head of Institutional Research at Prabhudas Lilladher said it was always been clear that there is going to be some volatility during the uncertain times of the elections. 

Fear around a repeat of the UPA victory in 2004 is making markets nervous, as the unexpected event had resulted in a 15 per cent cut in the Sensex in a single day, he said.

"Over the past year, markets have run up quite a bit and have priced in an NDA victory. We expect the continuation of policies if the NDA comes back to power. If we have an unexpected INDIA Alliance victory, we can see some negative impact on sectors like PSUs, defence, drones, AMC, wires and cables, metals, plastic pipes, and EMS," it said. 

Samco Securities said it expects the BJP-led NDA to win around 300-320 seats. It seems that majority of the market participants too are going with this number, it said. Narendra Solanki of Anand Rathi Shares and Stock Brokers said the incumbent government seems to be coming back with a comfortable majority.

"I believe markets have also factored in a majority for the Modi government. However the number of seats is still not priced. In case, it is near 400, we could see some upside," Solanki said.

Aggarwal of Prabhudas Lilladher said the market is pricing in about 300 seats for the NDA. "Policy continuity will be a big confidence boost for investors. Regardless, there is a lot of money sitting on the sidelines waiting to be deployed as soon as the election uncertainties come to an end," he said.

Arpit Jain, Joint MD at Arihant Capital said the BJP and NDA are likely to replicate their 2019 performance. The market is gradually pricing in a BJP or NDA victory, he said.