Raamdeo Agrawal on Exit Poll: India’s market-cap will double to $10 trillion in next 4-5 years

The final tally for the NDA could be well over 400 as a large section of independents will also want to be a part of the coalition; FPI behaviour will be an important factor to watch out for, says Raamdeo Agrawal, Chairman & Co-Founder of Motilal Oswal Financial Services

While the exit polls have predicted a huge sweep for the ruling BJP party, the actual number could cross 400 as well and that would pave the way for the Indian stock market doubling in size and touching a market capitalisation of $10 trillion in the next 4-5 years, said Raamdeo Agrawal, Chairman & Co-Founder of Motilal Oswal Financial Services.

“The numbers that are coming from the exit polls are not surprising as they are quite close to what was expected. In fact, I strongly believe that the actual number now could be closer to 400 or more than 400 as well,” said the market veteran.

He highlighted the fact that the actual wins of the BJP in the last set of state elections were higher than what was predicted in the exit polls at the time.

In terms of impact on the market, Agrawal believes that a strong mandate for the ruling BJP party will ensure that the valuation of the Indian stock market will double from the current $5 trillion – it recently touched $5 trillion and is currently pegged at $4.95 trillion -- to $10 trillion in the next four to five years.

“Also remember that this comes on the back of strong Q4 GDP numbers and easing of geopolitical situation. Assuming the actual numbers are in line with the exit polls or better than that, our markets could touch $10 trillion mark in the next 4-5 years,” he said.

An important factor to watch out, however, would be how foreign investors react. According to Agrawal, if the FPIs start to buy then the Indian market could register huge and swift gains.

“There are three scenarios – either FPIs will keep selling, or they will stop selling or they will start buying. If they start buying then the markets will zoom to an altogether different level as domestic institutions are already buying aggressively,” he said.

Interestingly, Agrawal believes that the final number of wins for the NDA alliance would still be higher, as a strong win for BJP would make a large section of independents also side with the ruling coalition.

“Let us also not forget that the final tally of NDA could still be higher as a large section of independents will also want to be part of the government rather than sit in opposition,” he added.