Modi 3.0 likely, D-St not ready for 2004 'India Shining' recap, says BT Markets survey 

Lok Sabha elections 2024: BJP seat wins in the ongoing general elections are unlikely to throw big surprises, with market analysts neither seeing '400 paar' nor an unforeseen event like 2004 when the BJP-led NDA failed to secure a majority despite 'India Shining, India Rising' narrative at that time. The stock market is factoring in 300-320 seats for the NDA alliance against 272 needed to form the government for the third time in a row.

SAMCO Securities finds just 20 per cent probability of the NDA alliance winning over 400 seats, a strong 70 per cent chance of it retaining power with over 272 seats; and a low 10 per cent outside chance of NDA failing to secure a majority. In the first two scenarios, it sees 2-5 per cent rally on Nifty while in the third case it sees a 10 per cent correction for stock market ahead. 

Amnish Aggarwal, Head of Institutional Research, Prabhudas Lilladher said he is not factoring in extreme scenarios for the most part because "they don’t seem likely." 

For conversation’s sake, if the BJP comes in with a thumping majority, there is more reason for a very positive reaction by the market, primarily due to the confidence that a continuation of policies will instill in investor sentiment, he said.

In anticipation of this, his brokerage recently upped the 12-month target on Nifty 50 to 25,810 from 25,363. 

"The markets are a little wary of any unexpected election outcome. While most opinion polls suggest a win for the NDA, our team of analysts caution that the markets are unprepared for a 2004-like election outcome, when the BSE Sensex fell 15.5 percent on the day of the election results," he said.

Nikunj Saraf, Vice President at Choice Wealth, who believes   surpassing the aspirational mark of 400 for NDA would not be a piece of Cake for NDA, said if the BJP wins over 272 seats and the PM Modi retains the premiership, the market is expected to react positively, particularly if the NDA gets close to 400 seats. 

Domestic sectors like financials, consumer discretionary, industrials/infrastructure and PSUs are likely to outperform, he said.

"If the BJP falls short of a majority but secures control of the government with the help of NDA allies, a sell-off in highly valued domestic-oriented sectors like industrials, infrastructure, and PSUs is expected," he said.

Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking said if the 2019 election results (BJP 303) were to be replicated, on might see an initial surge in the stock market.

"Although this could be dampened by certain concerns that may lead to potential corrections. If a BJP coalition government with NDA support comes into play, market sentiments might go through a corrective phase, which could make investors skeptical," he said.