Sensex, Nifty: Nuvama Institutional Equities said the BJP has won all the bipolar contests, which is much better than expectations. The margin of victory is impressive too, it said. 
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Sensex, Nifty: Nuvama Institutional Equities said the BJP has won all the bipolar contests, which is much better than expectations. The margin of victory is impressive too, it said. While BJP coming back to power in general elections 2024 has been the consensus base for a while, its resounding victory in three states of Hindi heartland – Madhya Pradesh, Rajasthan and Chhattisgarh, will likely bring a gap-up start for stock market today. The wins in three of five state elections --- dubbed as a semi-final to the Lok Sabha elections 2024, has eased uncertainty over policy continuation, which may push stock indices Sensex and Nifty higher into uncharted territory.
To recall, exit polls had earlier suggested an edge for BJP in Madhya Pradesh, a win for Congress in Telangana and Chhattisgarh and a lack of clear mandate in Rajasthan. The actual outcome has thrown a landslide victory for BJP in three states, analysts said adding that exit polls themselves were a positive surprise as compared to what was being anticipated ahead of elections.
The incumbent BJP’s performance in avoiding anti-incumbency and retaining a big state like Madhya Pradesh --fifth consecutive term, while managing to regain Rajasthan and Chhattisgarh should provide them with a good tailwind for the 2024 general elections, Motilal Oswal Securities said.
The results for Mizoram state elections will be announced today.
With the results of state elections giving a big victory to BJP in three states and some in-roads in Telangana as well, Manish Chowdhury, Head of Research at StoxBox expect Nifty to open with a gap up of at least 200-250 points on Monday. He further expect markets to cement gains and inch closer to the 22,000 level before the general elections in 2024.
"State election outcome will lead to greater confidence on continuity of BJP government at the centre which will drive markets higher. We are now quite positive on equities due to fundamental and liquidity strength, our FY24/25 Nifty EPS growth stands at 18 per cent each," PhillipCapital said.
State elections have in the past shown no clear correlation with Lok Sabha elections. To remember, BJP had lost the three states in December 2018, only to win the 2019 general elections with a better majority than 2014. Yet it nonetheless removes a key overhang of political uncertainty for the markets for the next five months.
"With the outcome overwhelmingly in favour of the incumbent BJP, the confidence of the market in the current dispensation and political continuity post 2024 Lok Sabha elections will get a boost. This augurs well for macro and policy momentum for India, which, at the moment, is seeing the highest growth among major economies (both GDP as well as corporate earnings)," Motilal Oswal said.
Nuvama Institutional Equities said the BJP has won all the bipolar contests, which is much better than expectations. The margin of victory is impressive too, particularly in MP, wherein media articles suggested the BJP was battling anti-incumbency, it said.
"The victory validates PM Modi’s popularity since he was a prominent figure in all the election campaigns. Besides, these states are located in the Hindi heartland; hence, the wins are likely to have positive rub-off on other states such as UP and Bihar. Also, the Congress’s loss is likely to weaken the INDIA alliance—alliance of the Congress and most large regional parties, which it was leading," the brokerage added.
Nuvama said election results were certainly a cut above market expectations and markets, to that extent, should cheer the outcome in the near term.
Stocks analysts like
Phillip Capital said while rural demand has been weak owing to inflationary pressures and lack of incremental growth triggers, we expect this segment to fare better as BJP is expected to incrementally focus more on welfare schemes in the run-up to the union elections. Larsen & Tourbo (L&T), HAL, GET&D, UltraTech Cement, ACC, JSW Steel, Maruti Suzuki, Tata Motors, Hero MotoCorp, ICICI Bank, Bajaj Finance, Axis Bank, PFC, Shriram Housing Finance and Muthoot Finance, among others.
Motilal Oswal Securities said it likes State Bank of India Ltd, Axis Bank Ltd, Mahindra & Mahindra Ltd, Hero MotoCorp Ltd, Larsen & Tourbo Ltd (L&T), UltraTech Cement Ltd, Titan Company Ltd and Indian Hotels Ltd.
In the midcap space, Motilal Oswal Securities like Godrej Properties, Lemon Tree, Sunteck Realty, PNB Housing, Angel One and Global Health.
"We remain bullish on the investment recovery theme and prefer industrials, defence, railways, financials (particularly PSUs), real estate, and cement. Our March 2024 Nifty50 target remains unchanged at 20,800 based on 19 times FY25 EPS of Rs 1,088," said Antique Stock Broking.
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