It is an important day for the country’s two largest and prominent political parties – the Congress and the Bharatiya Janata Party (BJP) – who are battling it out in a keenly fought assembly election in the key states of Gujarat and Himachal Pradesh.
Counting of votes for Gujarat assembly elections, which witnessed 71.32% voter turnout this time around, began this morning for all the 182 constituencies, with poll pundits predicting a third straight term in office for the current chief minister, Narendra Modi.
The elections were virtually a three-way contest with rebel BJP leader Keshubhai Patel, a former Chief Minister, launching his political outfit Gujarat Parivartan Party (GPP) before the polls and main Opposition Congress running a sustained and aggressive campaign against Modi.
Polling in Gujarat, which was held in two phases on December 13 and 17, will decide the fate of 1,666 candidates including Gujarat Chief Minister Modi, Arjun Modhwadia (Congress candidate from Porbandar), Shankersinh Vaghela (Congress candidate from Kapadvanj) and Keshubhai Patel (Gujarat Parivartan Party candidate from Visavadar) among others.
On the other hand, counting of votes for all assembly seats in Himachal Pradesh has also begun. The fate of 459 candidates, including heavyweights such as Congress leaders Virbhadra Singh, Vidya Stokes and Kaul Singh; BJP's Chief Minister Prem Kumar Dhumal, Rajeev Bindal.
So, how are the markets interpreting the outcome? Will the outcome of these Assembly poll have a significant impact on how things shape up at the Centre, markets, and the General Elections scheduled in 2014?
“As far as stock specific action is concerned, there could be positive impact on some counters such as the Adani Group if BJP comes in power. As far as the Centre and their policies are concerned, it all depends on how much seats Modi gets. If he gets between 100 – 110 seats, the Congress will still have two ways to go ahead,” said Kishor Ostwal, CMD of CNI Research.
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“However, if he gets between 124 – 129 seats as predicted by the exit polls, then there will be a big setback for Congress. In such a scenario, the Congress will delay the general elections to 2014 and there will be no chance of an early election. All this will convert into a pragmatic Union Budget in February 2013. The markets will react positively if Modi gets over 124 seats. Given the assembly poll outcome and the F&O settlement next week, I expect the markets to remain volatile. There is room for the Nifty to correct to 5,820 levels,” Ostwal adds.
Adds AK Prabhakar, Senior Vice President (equity research), Anand Rathi, “I think it will be a victory for reforms. Modi, if he wins, will be due to the reforms he has implemented in the state. Given this, the Congress will be propelled to push reforms more aggressively, which in turn is good for the markets. However, there can be some equation change on how things shape up politically for the Government.”
“On the other hand, if Modi loses, the Congress will get an upper hand, and I feel, in such a scenario, the reforms will be pushed back,” Prabhakar adds.