BJP seat wins, exit polls & margin of errors: What Emkay says on stock, forex & bond markets 

Exit polls 2024 have largely given the BJP-led NDA thumbs up, with average seat wins seen at 365-plus. Major gains for NDA are  expected to have come from Andhra Pradesh and West Bengal and that the BJP-Chandrababu Naidu-Pawan Kalyan alliance has likely swept Andhra, with the Congress possibly drawing a blank, analysts noted. 

Emkay Global said exit polls are not definitive, but the margin of errors (between exit polls and actual seat wins) have been lowering in the last couple of Lok Sabha elections. If the actual seat wins are line with exit polls, it would likely calm investor nerves, as political and policy continuity will be good for risk assets in the immediate run and macro stability in the medium term, it said.

"FX and rates markets will cheer the outcome, with RBI likely to juggle with the problem of plenty. Policy focus will continue to keep INR aligned with rest of EM Asia peers. Long bonds positioning should be buoyed. We continue to see bull steepening of the Gsec curve in coming months," it said.

Emkay Global said a healthy macro balance sheet of both public and private economic agents augurs well for a higher trend growth path. It expects reform-driven targeted expenditure agendas to continue from policy stand point. 

Emkay said the biggest gains for the NDA seem to have come from Andhra Pradesh and West Bengal. The BJP-Chandrababu Naidu-Pawan Kalyan alliance has likely swept Andhra, with the Congress possibly drawing a blank. In West Bengal, the BJP has possibly improved its performance for the third General Election in a row, bagging 29 seats and relegating the ruling party in the state, the Trinamool Congress, to a distant 12 seats only. 

"With both these states having been hard to crack for the BJP in the past, this trend, if confirmed in the actual results, will be a very welcome sign for the BJP. On the other hand, the NDA is likely to have lost 10-11 seats in Maharashtra, with the recent political chaos in the state likely to have hurt its chances - and this will likely play a big role in the Assembly elections later this year as well," it said.

Once the election event risk is over, all eyes would be on the budget in July, which could continue with the consolidation process while improving the budget internals, Emkay said.

"We see twin deficit to further improve ahead, which limits external shocks to India further via financial channels in case the global cycle turns averse," it said.