Union Home Minister Amit Shah commented in an interview that the current stock market move should not be linked to the 2024 general elections. He advised investors to consider buying before June 4, the election outcome date, expecting a market upswing with the formation of a stable government. Shah had faith in the BJP’s potential victory, foreseeing market growth with over 400 seats won by the party.
With the ongoing election phase and Nifty’s recent declines, Shah remained hopeful about market performance. Nomura India also showed BJP’s victory in opinion polls, projecting policy continuity and emphasizing infrastructure and manufacturing initiatives for the next five years. They anticipate reforms in land, labor, and capital factors, judicial system, and tax administration simplification, including GST expansion to electricity, oil, gas, and alcohol.
The government is focusing on enhancing the business environment for foreign investments and getting ready for future industries. MUFG Bank hint at a strong BJP win, which seems likely. Lower voter turnout in the beginning election phases has increased uncertainty. They believe that as long as the BJP secures a majority (>272 seats), the market should view the election outcome positively in the long run.
If the BJP loses some seats but maintains the majority, there might be temporary weakness in the INR FX and risk assets, which is expected to reverse over time due to policy continuity. Conversely, a significant BJP victory (>303 seats) could lead to positive market reactions, especially if it enables the passage of structural reforms in crucial sectors like land, labor, and agriculture.
If BJP wins, Mirae Asset mentioned that attention will be on the July Budget for potential change in direct or indirect taxes, MSP policy, and MGNREGA payments which, In the future put emphasis on infrastructure growth, agricultural laws, skill enhancement, and generating jobs in manufacturing to boost demand from rural areas, as per Mirae Asset Capital Markets.
