Trading strategies for the 2024 Lok Sabha elections: With six voting phases over and one remaining, poll strategists are busy mulling over the outcome of the Indian Lok Sabha elections to be held on June 4, 2024. Meanwhile, market experts are studying which segments are likely to perform well on election day, the trends in Sensex and Nifty 50, and average market returns in the short, medium and long term. While market participants have priced in the possibility of the Bharatiya Janata Party (BJP) winning a third term, a lot will depend on the outcome of the Indian Lok Sabha Elections 2024 exit polls to be released on June 1, 2024.
“In our view, the NDA is likely to form the government with the BJP winning a majority. The elections will end on June 1 and the market will react to the exit polls on June 3. In the last two elections, the BJP has won significantly more seats compared to the opinion polls’ expectations,” said Jitendra Gohil, chief investment strategist at Kotak Alternative Asset Managers.
Stock Market Today
Indian stock markets experienced widespread selling on Thursday, May 30, the expiration date of May futures and options (F&O) contracts as market participants remain jittery ahead of the outcome of the 2024 Indian Lok Sabha elections.
The Sensex and Nifty 50 have fallen for five consecutive days, losing around 2% each in the period, with investors largely ₹10 lakh crore. The Sensex index fell 617 points or 0.83 percent to end at 73,885.60 and the Nifty 50 index fell 216 points or 0.95 percent to end at 22,488.65.
The 30-stock BSE index has been trending lower since closing at an all-time high on May 23. The NSE index fell 479 points in the five sessions ending Thursday. Small and mid-cap stocks were the bigger losers today, with the BSE Midcap and Smallcap indices down 1.21% and 1.33%, respectively.
Uncertainty about the outcome has grown in recent days, and election-related tensions are slowing to subside. Asian stocks fell 1.3%, following an overnight decline on Wall Street, as expectations grew that global interest rates would remain elevated for a long time.
“Investors are reducing positions as a precautionary measure ahead of the election results,” said Deepak Jasani, head of retail research at HDFC Securities, adding that weakness in global markets also weighed on the market.Retail and high-net-worth investors reduced their net long positions in Indian index futures by one-sixth between mid-May and May 28, according to NSE data.
“The market is completely ignoring the fact that the current government will remain in office. But if the government does not win a majority, it will be completely devastating for the markets,” said Aishvariya Dadichi, founder and chief investment officer at Fident Asset Management.
Trading Strategies for the 2024 Lok Sabha Elections
Movement of Sensex and Nifty 50 on June 4
Analysts said the current decline in the Nifty index is a minor slowdown hiccup in the current scenario. “We expect the Nifty to cross the 23,000 level on June 4, which is at least 500 points higher than today’s movement,” said Rahul Ghose, CEO, Hedged In.
“The key level for Iindex is not 22,500 but 22,000 where the most put selling currently exists. Large players have also created short straddles at 23,000 levels for the June expiry, which further supports the earlier point,” Ghose added.
Kotak’s Jitendra Gohil maintains a positive stance on equities ahead of the general election results on June 4. The investment committee has decided to maintain a neutral stance on equities, i.e., continue to invest in line with asset allocation.
Sectors to watch on June 4
Large caps, public sector enterprises and public sector banks (PSBs) are some of the sectors to watch not just on important earnings announcement dates but also for the rest of the year. Rahul Ghose of Hedged.in expects this to be a year for large caps.
Market experts said if the NDA fails to form the government in 2024, it could trigger a heavy sell-off in state-run enterprises, capital goods, manufacturing (especially sectors related to the PLI scheme) and defence stocks. However, the IT and FMCG sectors are likely to attract buying interest.
Disclaimer: The views and recommendations provided in this analysis are those of the individual analyst or brokerage firm, and not of Mint. Because market conditions change rapidly and individual circumstances may differ, investors are strongly advised to consult with a qualified professional before making any investment decisions.
More to come
You are on Mint! India’s No.1 News Site (Source: Press Gazette). For more of our business coverage and market insights, click here!
