While everyone around us is waiting with eager anticipation for the results of the 2024 Lok Sabha elections on June 4, when the votes of 970 million people in the world’s largest democracy will be announced, retail investors are also praying.
We spoke to many wealth advisors to know which way the markets are expected to go. Most of them are of the opinion that the benchmark indices Nifty 50 and BSE Sensex are high and some kind of correction is in store. However, there are also speculations that a major correction is in store if the BJP-led NDA wins fewer seats than expected.
A veteran Mumbai-based equity analyst said small caps and small funds could see excruciating pain if the results do not turn out as expected.
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“Small caps are likely to fall hard if the Bharatiya Janata Party wins less than 272 seats in the Lok Sabha elections. Benchmark indices Nifty 50 and BSE Sensex may also see some correction but it is unlikely to fall significantly. However, the rally in large caps is likely to continue post the election results for several reasons,” said a Mumbai-based equity expert, who asked not to be named.
Towards the end of the year, the Reserve Bank of India may cut its key benchmark interest rate significantly, but that will depend largely on the monsoon. If the monsoon is favorable, a rate cut may be possible, he added.
“Investors are holding cash and are willing to wait until the election results are out. They want to invest at higher prices but will not take a decision until the results are out on June 4. Our advice is not to speculate on these short-term market movements. Most investors are clueless about how the market will react. So, it is better to wait and watch,” said co-founder Ravi Saraogi. Samasthity Advisor.
Which way will the tide turn?
With the Lok Sabha elections coming up, various scenarios can unfold. Depending on the outcome, the markets will react accordingly. Hence, how the benchmark indices Nifty50 and BSE Sensex react will depend on the exact outcome of the 2024 Lok Sabha elections.
Anirudh Garg, Partner and Head of Research, Invasset, PMS“If the BJP wins a majority, markets are likely to react favourably and reinforce existing sentiments. And if the ruling party performs weakly and fails to secure a decisive majority, it will lead to market uncertainty and short-term volatility,” it said.
“If a non-BJP government unexpectedly comes to power, we may see a market correction similar to that in 2004 when the Congress came to power against all expectations,” he added.
See also | 2024 General Election: How Different Voting Scenarios Affect Stock, Forex, and Bond Markets
Similarly, SVP Ravi Singh said, Retail Research Religare BrokingHe also said the impact on benchmark indexes would depend on which way the tide turns.
“If the Modi government secures a majority, we expect the markets to react favourably. If a BJP coalition government with the backing of the NDA comes to power, market sentiment may see a correction and investors may become skeptical. If the Modi government secures a majority, the Nifty 50 may touch 24,200 and the Sensex may touch around 78,500,” Ravi Singh said.
Sarvjeet Singh Virk, Co-founder and MD of Shoonya Finbasia “The outcome of the Lok Sabha elections may have various effects on financial markets in the near future based on factors such as political stability, policy continuity and investor sentiment. Currently, market volatility may be attributed to various unconfirmed news and updates regarding the election results. However, a key ongoing trend at this ambiguous stage is active retail investor participation. This is likely to continue further, reflecting positive sentiment consistent with investor expectations of political stability following the election results.”
Focus on long-term goals
Most wealth advisors argue that investors are encouraged to look at the bigger picture rather than getting obsessed with these “events”, however significant they may seem.
“Investors should focus only on their long-term financial goals and not worry too much about the short-term fluctuations that come with these events,” Saraogui said.
See also | Markets could fall 15-20% if BJP wins less than 250 seats and party alliance flops in three states: Ruchir Sharma
“While the election outcome may have short-term impacts, longer-term trends will be shaped by broader economic forces, technological advancements, global events and market fundamentals. Either way, it is important to make informed decisions, focus on your financial goals and respond to real developments rather than speculation. It is essential to have a solid investment plan, choose your investments carefully, diversify to manage risks and remain patient amid market uncertainty,” added Virk of Shoonya. Finbasia.
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