The stock market is unpredictable. However, the election predictions do have a weight on it, with the market always favouring bold and stable governments. The latest Exit Polls for the Lok Sabha elections 2024 show a return of PM Narendra Modi for the third time with a comfortable majority. This is likely to have a weightage on the market on Monday. Dhiraj Relli, MD & CEO of HDFC Securities, shares his market expectations on exit polls:
“Going by a majority of pollsters’ exit poll predictions, the NDA alliance could end up with 350-370 seats, enough to form the government for the third time and in line with the median forecast ahead of the exit polls. However, this number is almost the same as in 2019 and short of the 400+ target of the alliance,” Relli said.
Psephologists are at their best in analysing exit polls. The actual seat count may be a little different on June 4. We also need to check the exact gains or losses in vote share by the two alliances, he added.
Markets react majorly on a closing basis when there is a surprise in the exit poll predictions, Relli said.
However, as per political analysts, several exit polls’ prediction of the NDA government getting near 400 is surprising.
“In any case, the disappointment or euphoria may settle down in a couple of days, and the focus may shift to the policy announcements in the first 100 days of the new government,” Relli added.
The fact that the BJP could return to power is good for continuing and accelerating the reform process. This outcome was mainly on expected lines. Hence, markets may, after the initial excitement, wait for the new path set out by the latest government, he added.
If the NDA does not get over 400 seats, some fundamental reforms requiring constitutional amendments may be challenging to implement, but there is still a lot that can be done with this kind of majority, Relli added.
