Assembly Elections 2023: How Sensex, Nifty Will Trade After State Elections Results

The counting of assembly elections in four out of five states is in full swing on Sunday. As per the latest updates, the current ruling government party BJP seems to be leading in three states namely Madhya Pradesh, and Rajasthan, Chhattisgarh, while the Congress party is claiming huge seats in Telangana toppling its rival BRS in the region. However, vote counting in Mizoram has been postponed to December 4th due to a special occasion in the state. A majority win by the BJP is likely to cheer investors' mood on Monday.

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 this assembly elections will play a crucial role in the upcoming general elections in 2024. And that will have a huge influence on the stock market. In general terms, assembly elections involve voting from every citizen of India in only their constituency. Candidates who win the State Legislative Assemblies elections become the 'Member of Legislative Assembly (MLA) who then hold their respective positions for a tenure of 5 years or until their ruling party is dissolved.

According to Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, during the last five General elections, the markets had rallied in the run-up to the elections with returns ranging from 3.1% to 30.4% in the six months to the elections. He added, "Markets like stability and, therefore, the market's preference would be the continuation of the BJP regime after the General elections in April-May 2024."

Further, Vijayakumar said, "The results of the five state elections will give an indication of the likely outcome of the General election. The exit poll results are mixed: But there is a high probability of the BJP winning in the crucial states of Rajasthan and Madhya Pradesh. This will strengthen the prospects of the BJP in the 2024 elections. "

In terms of the market, Vijayakumar said that it has already started discounting the expected positive election outcome. Adding he said, "After the actual results on Sunday, the market will respond on Monday. The concern is that valuations are already a bit stretched."

Meanwhile, Swapnil Shah, Director - Research, StoxBox said, "With exit polls of the recent state elections showing an upper hand to BJP, markets have reacted positively to the development. If the final results of elections which are scheduled on Sunday are also on the same lines, we expect markets to further cement gains."

Shah added, "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. As we move closer to the 2024 general elections, we believe that any decisive win by the BJP in key states would send 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: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.