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With Victory For BJP-Led NDA, Markets Reach Historic High

There is a general expectation among retail investors that with the NDA government getting a second term, there would be political stability

With Victory For BJP-Led NDA, Markets Reach Historic High
BSE Sensex hit 40,000 mark during the opening trade on Thursday
With Victory For BJP-Led NDA, Markets Reach Historic High
outlookindia.com
2019-05-23T15:52:53+05:30

As Lok Sabha election results showed landmark victory for BJP-led NDA, the stock markets reached unprecedented levels. The benchmark BSE Sensex hit 40,000 mark during the opening trade on Thursday.

Even during the exit poll results, the Sensex surged by over 1400 points during the day’s trading.

Experts are of the view that following this new optimism and confidence riding the market, the mid-caps and small-caps, which have been investors’ favourite for long but have not performed well in the last few months, would turn around and start showing better results. Mutual funds are also expected to perform better as a whole.

There is a general expectation among retail investors that with the NDA government getting a second term, there would be political stability and a majority government would be able to take decisions easily and carry on with reforms and development agenda.

“Markets were looking for stability, continuity and strong leadership rather than a fractured mandate - this has led to the new high. We believe India allocation from global funds will increase and more ETF flows are likely over the short term that could drive the markets even higher,’ says B Gopkumar, ED and CEO, Reliance Securities.

Most people expect the economy to be on an even keel following political and policy stability. There is a general expectation that key economic issues will be addressed now that the political instability is out of the way. However, there are also concerns on how the economic slowdown will be tackled by the new dispensation after a pronounced slowdown was witnessed in the economy. One of the key concerns is how the new government would steer the economy to achieve higher GDP growth along and what would be its social sector agenda.

“Election Results are positive for the market as it gives a stable Government for the next 5 years. However, post initial euphoria, focus would shift to hardcore economic decisions and the manner in which slowdown and economy is handled in Modi2.0. We are positive on long term for the markets, our NIFTY target in a bullish scenario is 13000, for which growth rates need to catch up,” says Amnish Aggarwal, Head Research Prabhudas Lilladher.

It remains to be seen how the government addresses social sector and the areas of the economy that need attention, particularly inflation management so that the economy shows better growth.

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