The market is likely to stay rangebound until the time Gujarat election results are out; hence, a big rally or a Santa Claus rally might have to wait for another year
One of the big overhangs which D-Street is facing is the outcome of Gujarat elections which could question the popularity of the current ruling government which has a stronghold in the state since 2002.
The market is likely to stay rangebound until the time Gujarat election results are out; hence, a big rally or a Santa Claus rally might have to wait for another year. Even if BJP does win Gujarat election we could see a sigh of relief but if the results disappoint then chances of a big cut could be on cards.
One big factor which has fueled concerns is the opinion polls which now shows a neck-to-neck contest between the two big political parties – BJP and Congress.
The ABP News- Centre for the Study of Developing Societies (CSDS) opinion poll shows a tough fight for Bharatiya Janata Party (BJP) in Gujarat. The state is slated to go to polls in two phases — on December 9 and 14. Results will be declared on December 18.
The Bharatiya Janata Party (BJP) continues to have an edge over the Congress even though their vote share might be tied at 43 percent each, said a report quoting an opinion poll conducted by ABP News and Lokniti-Centre for Studies of Developing Societies (CSDS) projected on Monday.
According to the forecast, the BJP is likely to get 91-99 seats, while the Congress may get 78-86 seats in the 182-member state assembly, it said.
In an interview to CNBC-TV18, Deven Choksey of KRChoksey Securities shared his views on what the market will make of this opinion poll.
We will find a number of polls and opinions coming out but we will wait till the election results are out, said Choksey. That said, the market is likely to remain subdued till the time results are out.
Talking about stocks, he said stock specific action would be there. We will see the correction in the market as an opportunity to buy into quality stocks whether the government is formed by BJP or not.
Most analysts see Gujarat elections as a litmus test for the Modi government which has come under tremendous pressure after demonetisation, goods & services tax, as well as a crackdown on black money.
However, analysts remain cautious but not worried about the outcome. The BJP would be able to win the election but the margin may not be the same which remains a concern.
“BJP is definitely going into this election based on the popularity that Narendra Modi has seen over the last few years. By making Modi the center stage, BJP is clearly looking to refocus on the contest, with its principal rival, Congress at the moment,” Nikhil Kamath, Co-founder & Head of trading, Zerodha told Moneycontrol.
“We do not expect a win by Modi to move the markets up or have too much of an upside based on this news alone but a loss and upset from BJP could take the markets lower,” he said.
Kamath is of the view that the news from this event will be on lines of what is being expected, BJP will win and the market will not have major reactions based on this.“Looking at the market, we believe this inherent weakness in the market will continue and we expect the market to move lower into the 10,000 to 10,100 region in the coming expiry, i.e. the December expiry,” he said.