Exit polls predict BJP win: How the markets may react on Monday

The polls come as a shot in the arm given how the markets have been marred by election jitters throughout May.

Most pollsters projected a comfortable victory for the BJP-led NDA alliance, paving the way for Prime Minister Narendra Modi to come back to power for the third time. If we consider the average of the polls, the Modi government is likely to cross the 350-mark.

“Technically and fundamentally the market is poised for a rally. Largecaps in financials, capital goods, automobiles, and telecom are likely to lead the swing,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

The bulls might take further steam from better-than-expected growth (8.2%) in GDP numbers, released late Friday last week.Analysts also expect public sector companies along with engineering, power, and banks also lead the rally on Monday. “Also, there could also be short covering by foreign investors, which would further add to the party on the street,” said Gaurav Dua of Sharekhan by BNP Paribas.However, there could be heightened volatility as we get closer to the big poll results on June 4. As the overall sentiment of the market is bullish, investors are advised to use any correctional fall that can be accompanied by fresh buying.If the actual numbers turn out to be somewhere close to the predictions, markets would embrace the euphoria as it would mean a stable government with continuity in the policy framework. Political continuity would be a positive for riskier assets in the immediate run and macro stability for the medium term.

“Expect reform-driven targeted expenditure agendas to continue from a policy standpoint, while a healthy macro balance sheet of all economic agents of India augurs well for a higher trend growth path,” said Madhavi Arora, Lead Economist, Emkay Global.

Once the election event is over, in the medium run, the focus would then likely shift to policy including the Budget in July, which could continue with the consolidation process.

What should investors do in the run-up to June 4?
Analysts said the rally has room to extend in sectors like diversified businesses and varied sectors.

“We see potential for continued growth in stocks like BPCL and IDBI Bank. These companies offer diversification benefits, and being MNCs, they might have additional growth opportunities. So, if you’re looking to capitalize on the current trend, these could be interesting options to consider,” said Arpit Jain, Joint MD, Arihant Capital.

“From a technical perspective, the 22,400 level, near the 50-day EMA, is critical on the downside, while the 23,400 level will be crucial on the higher side,” said Arvinder Singh Nanda, Senior Vice President at Master Capital Services.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)