Lok Sabha Elections 2019: 'Chunav' impact on consumer, auto, FMCG sector - What to expect from stock market post results?
The ongoing Lok Sabha Elections 2019 result will have an impact on the stock market or not? The question is there in the mind of most retail investors out there. Well, the answer lies here. Indian Stock Market has seen a great period in the last few weeks with an upside trend.
The ongoing Lok Sabha Elections 2019 result will have an impact on the stock market or not? The question is there in the mind of most retail investors out there. Well, the answer lies here. Indian Stock Market has seen a great period in the last few weeks with an upside trend. Hovering presently near to all-time highs, 50 stock index- BSE Sensex closed at 39,067.33. While 50 share index, NSE Nifty50 closed at 11,754.65. Amarjeet Maurya, AVP, Angel Broking told Zee Business Online, ''In most of the above cases, we believe that a stable government will matter more than which party comes to power. However, a coalition of smaller regional parties may not be in the larger interests of these sectors. Here is why. Consumer goods and Auto would be largely a play on domestic consumption. Same is the case with FMCG also. These sectors will depend more on liquidity, consumer spends and rural thrust. Typically, any majority government that can give stability will be conducive for these sectors. Most of the momentum will come from market demand rather than from government action. The government will focus more on creating an enabling environment.''
Banking stocks have been part of the ongoing rally with Nifty Bank index gaining 1.5 per cent on Friday. Some of the positive factors for the market could be the corporate earnings, investment flows and the general elections. Foreign investors have poured more than Rs 46,000 crore in the March quarter and these factors are likely to be the key driving factors for Indian markets this eventful quarter. Foreign equity into the Indian market has most investments majorly in six sectors: financials, IT, technology stocks, oil & gas, autos and pharma. This would have a positive impact. Foreign investors have been infusing money in India with the hopes of Modi returning to incumbency. The FY20 will be an eventful year with the new government taking office, although the volatility in the domestic market will increase around the time of election results.
''The mid-cap outperformance normally happens when the rupee is stable, exports are booming or when oil prices are low. The NDA government in the last five years has managed these quite well. The rupee has been stabilized both ways with a mix of RBI intervention on the downside and dollar swap bonds on the upside. Exports growth has gotten back to 11% and a stable policy environment would be conducive. Oil is not exactly a domestic factor the current government has been able to underscore its influence in the global oil markets. A status quo in government will be most suited,'' Maurya mentioned.
As per the macro data released by the government on April 15, micro factors will be driving Indian markets ahead as the WPI inflation has increased for the second straight month to 3.18 per cent in March on inflated prices of food and fuel. Also, the RBI is still enjoying a comfortable position even after WPI inflation touching 3.18 per cent in March due to a rise in food prices across the nation.
Commenting upon the market trend, Avinash Gorakshakar, Head research, Joindre Capital Services said, ''Markets are expected to see significant relating post the Lok Sabha elections as large clarity will emerge. A lot of foreign money and domestic money us waiting on the sidelines waiting to invest in the markets. Hopefully with a good monsoon better corporate earning vs and large push from liquidity can push the nifty to 12000 levels. However, the level of the majority if the present NDA govt will be very important. Any number beyond 250 for BJP on a standalone basis will be a big positive''
The Asian markets, on the other hand, are also hovering with mixed trends. Near to 9-month highs and huge exports with strong banking data from China last week, investors are having relief on the economic concerns over Chinese financial fronts.