One Thing From Karnataka Elections That Could Worry Markets

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    On Wednesday, a day after the Karnataka assembly elections, stock markets reacted a fair bit. One of the biggest worries for the stock markets after the Karnataka elections was that 2019 is likely to get very tough for the BJP. In fact, it is now possible that the opposition could even stitch together an alliance to form a government at the centre.

    One Thing From Karnataka Elections That Could Worry Markets
    The Congress is likely to form local alliances and do all it can to keep the BJP away in 2019. The party jumped to sacrifice the Chief Ministership position and grant the same to the JDS in Karnataka, despite having double the JDS tally.

    This is clearly one big message that we got from the Congress, that it will do everything to stop the BJP.

    According to one news reports, if the Congress and the JDS were to tie-up, and form an alliance to fight together in 2019, the BJP would win only 13 seats in Karnataka,

    It's getting increasingly tough for the BJP. Already, we are seeing Chandrababu Naidu walk away from the NDA alliance in Andhra Pradesh and Shiv Sena in Maharashtra has promised to go it alone in 2019. On the other hand, the likely alliance between the SP and the BSP, could see a massive damage to the BJP seats in Uttar Pradesh.

    Interestingly, in the Karnataka elections, it was not as if the Congress fared badly. In fact, it's vote share was more than that of the BJP. The BJP's vote share in Karnataka has fallen from 43 per cent in 2014 to 36 per cent in the state elections. Narendra Modi remains popular, but, his wave is waning.

    It is unlikely to be very easy for the BJP to cobble the same majority numbers that it got in 2014. It is likely to lose seats in Gujarat, Uttar Pradesh, Maharashtra, Punjab, Delhi, Madhya Pradesh and Rajasthan, where 80 to 100 per cent of the seats were won by it. The party will have to make up this shortage from Orissa, West Bengal, Kerala and the North East.

    Making a big break-through in West Bengal and Kerala is going to be a herculean effort. All in all, the Karnataka elections leave us with one thought: "Are we heading for a 1996 like situation in 2019, where a weak Congress propped up the third front". At the moment, it does seem possible.

    GoodReturns.in 

    Read more about: sensex nifty
    Story first published: Thursday, May 17, 2018, 5:23 [IST]
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