 "Exit Poll 2024: Bank, auto, defence stocks may see 'Modi rally' on Monday")
Stock market after Lok Sabha elections exit poll 2024: A likely thumping victory for the Narendra Modi-led Bharatiya Janata Party (BJP), as predicted by exit polls 2024, may trigger "a big stock market rally" on Monday, June 3, 2024.
The stock markets, according to experts, have not priced-in such strong numbers, and the same may reflect in opening trade today.
On Saturday, June 1, 2024, most exit poll results for Lok Sabha elections 2024 projected a hat-trick for the BJP-led National Democratic Alliance (NDA), where Prime Minister Narendra Modi could remain India's Prime Minister for the third straight term.
What do Lok Sabha exit polls 2024 predict for team Modi?
Two exit polls forecast that the NDA might win 400 seats. The News 24-Today's Chanakya said that the NDA may win 400 seats with a margin of error of 15 seats, while the India Today-Axis My India survey predicted that NDA may bag 361-401 seats.
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On average, the BJP-led NDA is projected to win 360 seats, whereas the I.N.D.I.A bloc may bag less than 150 seats. READ MORE
How will stock markets react on Monday, June 3, 2024?
Narendra Solanki, Head Fundamental Research - Investment Services, Anand Rathi Shares and Stock Brokers:
The exit poll numbers are very strong for the incumbent government, and the stock markets may not have priced in such strong numbers. We could see some reflection of that on Monday's opening trade.
Overall, it's positive for the markets in the short as well as long-term. Also, the recently released higher-than-expected gross domestic product (GDP) growth data for Q4FY24 and FY24 should provide additional support to the existing positive momentum.
Motilal Oswal Financial Services
If the actual election results are in line with the exit polls, it will be the first time since the 1960s that an incumbent Prime Minister is returning to power for a third consecutive term with a comfortable majority. The last time this happened was in the 1960s when Jawaharlal Nehru (India's first Prime Minister) won the Lok Sabha Elections in 1962 (he had also won in 1952 and 1957).
Equally, if the BJP wins ~325 seats as predicted in exit polls, this would be an unprecedented performance. It would have surpassed its previous tally for the second time in a row after winning 282/303 seats in 2014/2019, highlighting the pro-incumbency trend.
Equity markets displayed some anxiety and nervousness recently around the impending political uncertainty, which resulted in a sharp rise in volatility in Apr and May’24. With this clear verdict, markets will heave a sigh of relief, in our view, and go back to fundamentals/business-as-usual mode.
This verdict and consequent political stability and continuity in policy-making will act like an icing on the cake and keep India as the cynosure of all eyes, in our view.
We remain 'Overweight' on Financials, Consumption, Industrials, and Real Estate. Industrials, Consumer Discretionary, Real Estate, and PSU Banks are our key preferred investment themes.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services:
Exit polls’ results, which indicate a clear victory for the NDA with around 360 seats, completely removes the so-called election jitters which have been weighing on markets in May.
This comes as a shot in the arm for the bulls who will trigger a big rally in the market on Monday. Large-caps in financials, capital goods, automobiles and telecom are likely to lead the rally.
The bulls will be further emboldened by the better-than-expected 8.2 per cent growth in GDP numbers, which came after market hours on Friday. Technically and fundamentally, the market is poised for a rally.
Dhiraj Relli, MD & CEO, HDFC Securities:
Going by most pollsters’ exit poll predictions, the NDA alliance could end up with 350-370 seats, enough to form the government for a third time. However, this number is almost the same as that in 2019 and short of the 400+ target of the alliance.
While psephologist are at their best in analysing exit polls, the actual seat count may be a little different on June 04. We also need to check the exact gains or losses in vote share by the two alliances.
Unless we get a surprise in the balance exit poll predictions, Indian markets may not react majorly to these numbers on a closing basis.
In any case, the disappointment or the 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 Govt.
The fact that the BJP could return to power is good for continuing and accelerating the reform process.
This outcome was mainly on the expected lines. Hence, markets may, after the initial excitement, wait out for the new path set out by the latest government.
Madhavi Arora, economist, Emkay Global:
Even as exit polls are not definitive, the margin of errors has been lowered in the last two election cycles. The final outcome, if in line with exit polls, would likely calm investor nerves as political and policy continuity will be good for risk assets in the immediate run and macro stability in the medium term.
Forex and rates markets will cheer the outcome, with the Reserve Bank of India (RBI) likely to juggle with the problem of plenty. Policy focus will continue to keep the Indian rupee (INR) aligned with the rest of the emerging market (EM) Asia peers. Long bond positioning should be buoyed. We continue to see bull steepening of the G-sec curve in coming months.