MOFSL stated in its most recent strategy note that although the results of the recent state elections in Haryana and Jammu & Kashmir did not significantly alter markets, they may keep the markets on edge, as exit polls predicted losses for the BJP in both Haryana and Jammu & Kashmir.
It is anticipated that the Congress would secure 50–58 seats in the 90-member assembly with a majority. As a result, 31 seats were counted in the 2019 elections. According to the CVoter exit poll, the ruling BJP, which is aiming for a hat-trick of victories in the state, is predicted to win 20–28 seats, a drop from 40 seats in 2019.
It is expected that the Congress-National Conference alliance will secure 40–48 of the 90 assembly seats in Jammu and Kashmir. The People’s Democratic Party (PDP), led by Mehbooba Mufti, is predicted to gain 6–12 seats, while the BJP is predicted to win 27–32 seats. 6-11 seats could go to independent candidates and other parties.
MOFSL observed that the stock markets appear to be undergoing a genuine tug of war between the headwinds and tailwinds. It mentioned that India has seen a surge in tactical FII outflows as a result of China’s monetary stimulus. According to the report, corporate earnings are declining following four years of robust double-digit growth. The reasons for this are the pressure from commodities and the diminishing impact of BFSI asset quality improvements.
Market expert Shankar Sharma on Sunday compared China’s stock market, which has begun rising as a result of Beijing’s stimulus effort, to the Congress. In a tweet. Sharma, the founder of GQuant Investech, said: “In a stock market sense, the BJP is looking like the Indian stock market, and Congress, like the Chinese stock market.”
With 6% declines in the Nifty EPS since July 2024, the earnings revisions have taken a negative turn. The recent print from high-frequency indicators, such as power demand, PMI data, GST collections, and auto numbers, also indicates a softening in demand. “The expensive broader market valuations (NSE Midcap index at 70 percent premium to Nifty-50 and market cap at 146 percent of GDP) and the narrowing of market breadth further complicate the risk-reward equation,” MOFSL said.
However, the brokerage believes that the ongoing holiday season, better-than-expected monsoon from July to September, and the ensuing increase in rural consumption offer a short-term boost to economic activity. The US Federal Reserve is leading the way among major international central banks in their shift towards a cycle of monetary easing. It stated that this change suggests a good climate for riskier investments.
Join our whatsapp group for Latest updates