BJP seat wins & stock market: Haryana results set tone for Maharashtra elections, say analysts

Benchmark indices snapped a six-day losing streak on Tuesday, partly led by strong showing by the incumbent BJP in the Haryana state elections. The ruling party won 22 seats and was leading in 27 others in the 90-seat assembly, and was on course to win the third term. The INC+, on the other hand, was distant second at 36 seats (win and leading) against exit polls that projected the Congress-led alliance to win 50-58 seats.     

This election might not have been a pivotal event for the markets per se, but an adverse showing would have added to the already persistent headwinds, said MOFSL. The domestic brokerage said the outcome provides momentum to the BJP and opens up the contest for the upcoming state elections in Maharashtra, Jharkhand and Delhi over the next four months.

Numerically, politically and strategically, Maharashtra assumes far greater importance and BJP's Haryana victory may now keep the market excited and guessing for the outcome in November 2024 elections, MOFSL said.

"The markets are likely to heave a sigh of relief with the verdict and interpret it as course correction by the BJP after the relatively unexciting outcome of the Loksabha polls," the brokerage added.

Santosh Meena, Head of Research at Swastika Investmart said BJP's victory in Haryana is a positive development for the markets, particularly given that exit polls had suggested an opposite outcome, contributing to market pressure yesterday. 

"While the recent market correction is driven by various factors, there is still some nervousness surrounding upcoming state elections. However, the outcome in Haryana, a focal point for the farmer agitation, is expected to provide the market with some relief and confidence, especially as it looks ahead to the Maharashtra elections," he said.

BJP’s success in Haryana especially after exit poll predictions highlights its vision towards reforms and economic growth, which was under scanner after parliamentary elections, said Rajesh Sinha Senior Research Analyst at Bonanza. 

In Maharashtra and Jharkhand, where elections are due, the BJP's performance in Haryana will serve as a barometer for voter sentiment and party strategies, he said adding that Haryana results will encourage BJP's campaign and influence voter dynamics in the two states by reinforcing its narrative of governance and development.

"BJP's victory in the Haryana is expected to significantly influence stock markets and set a tone for upcoming elections in Maharashtra and Jharkhand. We feel that BJP's return to power for a third consecutive term, will boost market sentiment, as evidenced by a notable rebound in Sensex and Nifty following the election results," he said. 

Meanwhile, in the Jammu & Kashmir elections, BJP won 29 seats against the NC+'s 49. This was in line with 27-32 seats that the CVoter exit poll suggested for BJP earlier. 

The BSE Sensex climbed 584.81 points, or 0.72 per cent, to close at 81,634.81. Nifty settled the day at 25,013.15, up 217.40 points or 0.88 per cent.

"Good state election result for the ruling party, contrary to the exit polls, has brought some optimism in the domestic market," said Vinod Nair, Head of Research, Geojit Financial Services.

Aman Soni, Head of Operations at Prudent Equity, however, believes the stock market will prioritise earnings over state election outcomes in the short term. He said the market reaction to the recent general election results was way better than what many had anticipated, alleviating previous concerns. 

"While state elections are typically routine, exceptions exist in key states like Maharashtra and Uttar Pradesh. Currently, the markets are looking beyond elections, focusing instead on broader issues such as global economic challenges and the ongoing earnings season. In the medium term, we can expect volatility, especially with significant events on the horizon, including elections in both the US and India, potential rate cuts by the Fed, commentary from the RBI and the continuing earnings reports," he said.
 
Investors should remain vigilant as these factors could significantly influence market dynamics, the analyst said.