New Delhi: Experts on Tuesday said the future of the stock market depends on the economic policies of the new government, in which factors like GDP growth, inflation and global conditions play an important role.
The BJP-led NDA is still trying to form a government, although with significant support from alliance partners, markets look concerned about its prospects of taking a strong decision.
In fact, experts cautioned investors to be prepared for volatility due to currently high valuations and suggested adopting a diversified approach.
Benchmark equity indices Sensex and Nifty fell more than 8 per cent intra-day on Tuesday and later closed with losses of nearly 6 per cent, the biggest fall in four years, as trends showed The ruling BJP is trailing with a clear majority in the Lok Sabha elections. ,
Sensex fell 4,389.73 points to close at 72,079.05 and Nifty fell 1,379.40 points to close at 21,884.50.However, the market rallied sharply on Monday after exit polls predicted a massive victory for the BJP-led NDA in the Lok Sabha elections.
Manish Choudhary, head of research at Stockbox, said the reformist approach, which was the hallmark of the last two terms of the NDA government, may be left behind in the third term.
According to available trends, BJP is likely to get around 240 seats in the 543-member Lok Sabha. Now it will have to depend on allies like TDP and JDU to form the next government.
"The election results show a figure of less than half for the current BJP government, which points towards a coalition government. This will lead to increased dependence on allies in taking major policy decisions and sharing of some cabinet seats, leading to policy paralysis. And there will be uncertainty in the functioning of the government,” said Yashovardhan Khemka, senior manager of research and analytics at Abans Holdings.Yashovardhan Khemka, senior manager of research and analytics at Abans Holdings, said the market is assessing the risks associated with this scenario and the potential impact of a shift towards socialist policies by the government, which is leading to a selloff in the market.
“The future trajectory of the market depends on the economic policies of the new government, with factors like GDP growth, inflation and global conditions playing a key role,” said Suman Banerjee, CIO, Hedonova.
Since May 2014, the combination of political stability with supportive global factors such as the promise of reforms, improving economic conditions and quantitative easing by developed markets fueled a strong rally in Indian stock markets. This surge led to an increase in investor wealth by more than Rs 300 lakh crore, reflecting growing confidence and participation.
Experts said investors like certainty and continuity of policies, with India being a long-term structural growth story.Manish Jain, director, institutional business (equity and FI) division at Mirae Asset, said, “There are a lot of elements present. Economics should dominate anything. We are already among the top in terms of factors like GDP, market cap, demographic dividend etc. But there are.” Capital markets, said.
The BJP-led NDA is still trying to form a government, although with significant support from alliance partners, markets look concerned about its prospects of taking a strong decision.
In fact, experts cautioned investors to be prepared for volatility due to currently high valuations and suggested adopting a diversified approach.
Benchmark equity indices Sensex and Nifty fell more than 8 per cent intra-day on Tuesday and later closed with losses of nearly 6 per cent, the biggest fall in four years, as trends showed The ruling BJP is trailing with a clear majority in the Lok Sabha elections. ,
Sensex fell 4,389.73 points to close at 72,079.05 and Nifty fell 1,379.40 points to close at 21,884.50.However, the market rallied sharply on Monday after exit polls predicted a massive victory for the BJP-led NDA in the Lok Sabha elections.
Manish Choudhary, head of research at Stockbox, said the reformist approach, which was the hallmark of the last two terms of the NDA government, may be left behind in the third term.
According to available trends, BJP is likely to get around 240 seats in the 543-member Lok Sabha. Now it will have to depend on allies like TDP and JDU to form the next government.
"The election results show a figure of less than half for the current BJP government, which points towards a coalition government. This will lead to increased dependence on allies in taking major policy decisions and sharing of some cabinet seats, leading to policy paralysis. And there will be uncertainty in the functioning of the government,” said Yashovardhan Khemka, senior manager of research and analytics at Abans Holdings.Yashovardhan Khemka, senior manager of research and analytics at Abans Holdings, said the market is assessing the risks associated with this scenario and the potential impact of a shift towards socialist policies by the government, which is leading to a selloff in the market.
“The future trajectory of the market depends on the economic policies of the new government, with factors like GDP growth, inflation and global conditions playing a key role,” said Suman Banerjee, CIO, Hedonova.
Since May 2014, the combination of political stability with supportive global factors such as the promise of reforms, improving economic conditions and quantitative easing by developed markets fueled a strong rally in Indian stock markets. This surge led to an increase in investor wealth by more than Rs 300 lakh crore, reflecting growing confidence and participation.
Experts said investors like certainty and continuity of policies, with India being a long-term structural growth story.Manish Jain, director, institutional business (equity and FI) division at Mirae Asset, said, “There are a lot of elements present. Economics should dominate anything. We are already among the top in terms of factors like GDP, market cap, demographic dividend etc. But there are.” Capital markets, said.
