All eyes are on the state election results which are due tomorrow and whether Bharatiya Janata Party, which is also the ruling party, will secure its win in Uttar Pradesh. However, market experts believe that such events are digested in 4-5 days and the focus is back on global news and earnings.
All eyes are on the state election results due tomorrow and whether Bharatiya Janata Party, which is also the ruling party, will secure its win in Uttar Pradesh.
Markets, which was not happy with the downgraded earnings season in January, factored in the positives of the assembly polls. This led to the re-rating of valuations as there was significant feedback from people that the ruling party will get a strong mandate in the state elections.
"This partly explains why the market is flat today," said Manishi Raychaudhuri of BNP Paribas.
“Market sentiment will be positive if BJP comes to power as people will bet on the continuation of the reform agenda by the ruling party,” he said.
He expects market to touch 30,300 level by the end of calendar year 2017.
Market expert Ambareesh Baliga listed few scenarios on how market will react to the results of the battle for the states.
In the first scenario he said that if BJP gets less than 150 seats, the probability of which is low then the markets will crack and will be closer to 8400-8500 level. In the second case, BJP will win around 160 to 190 seats but will not be able to form the government.
In that situation, an alliance of Samajwadi Party (SP) and Bahujan Samajwadi Party (BSP) may form the government. In this case, markets will correct as the mandate will be against BJP.
“If BJP forms the government then market will be high but we will get sold into as the valuations will be steep. There will be a rally of 200 points,” he said.
He further said that events like these (state elections) get digested in four to five days and then the focus of the market is back to global news, earnings.
Oil and gas stocks like ONGC, HPCL bounced back from the lows of the day. But, SP Tulsian is not in the favour of a merger between upstream and downstream companies.
“If you are making a khichdi of oil marketing companies then you will not derive the right valuations,” he said.
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