Assembly Elections 2023: Saffron Party Sweeps 3 Big Wins, Could State Elections Results Drive Nifty To 22,000?

In a banger, the saffron party has swept three major wins in the heart of North India. The current ruling government BJP will continue to govern Madhya Pradesh for another term, while the party toppled its rival Congress from power in Rajasthan and Chhattisgarh. However, Congress claimed a victory in Telangana state. The stock market will react to these assembly elections outcome.

Assembly elections were held in five states, of which, outcomes of voting in Rajasthan, Madhya Pradesh, Chhattisgarh, and Telangana were announced on December 3rd. However, Mizoram has postponed its voting results to December 4th due to an auspicious occasion.

BJP and Congress were rivalling for 230 assembly seats in Madhya Pradesh, 200 seats in Rajasthan and 90 seats in Chattisgarh. Congress has been giving tough competition to local ruling parties like BRS, MNF and ZPM for 119 and 40 assembly seats in Telangana and Mizoram. The outcomes of these assembly elections are seen as important semi-final for the upcoming general elections in 2024. And that will have a huge influence on the stock market.

Manish Chowdhury, Head of Research, StoxBox explained that with the results of state elections giving a big victory to BJP in three states and some in-roads in Telangana as well, it is expected markets to open with a gap up of at least 200-250 points on Monday.

Last week, on Friday, Sensex soared by 492.75 points or 0.74% to end at 67,481.19, while Nifty 50 jumped by 134.75 points or 0.67%. Meanwhile, BSE-listed firms' market cap stood at more than Rs 337.67 lakh crore.

In the trading week that ended on December 1st, Sensex gained by 1,499.13 points or 2.27%, while Nifty 50 surged by 437.50 points or 2.21%. Also, during this week, the 50-scrip benchmark touched a new all-time high of 20,291.55, while the BSE market cap crossed Rs 4 trillion.

Chowdhury added, "We further expect markets to cement gains and won't we're surprised to see markets closer to the 22,000 levels before the general elections in 2024. The image of the BJP as a pro-reformist and the performance of the economy on various fronts, especially during the COVID period and gloomy global economic situation, have provided market participants confidence that a dual-aided right-wing government is beneficial in the longer term."

Furthermore, Vaibhav Shah, Fund Manager, Torus ORO PMS said, "With the recent rally in the stock market, any negative news may lead to profit booking. However, the current election results are priced in from market perspective and so we believe that there won't be any major impact on the markets."

Additionally, Kaushik Dani, Fund Manager, ABANS Investment Managers said, "Positive outcome for the ruling government in current state elections brings a big cheer for the Equity markets. This also acts as a precursor to 2024 general assembly elections and increases hope for the continuation of regime, thereby political stability and further economic reform."

Moreover, as the market moves closer to the 2024 general elections, Chowdhury said, "We believe that the decisive win by the BJP in key states has sent a strong message to investors betting on India's rising growth potential and position the country on a stronger footing as compared to its peers."

Disclaimer:

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