Polling results have shocked the stock market. Nifty and Sensex witnessed the worst single-day fall since Covid days. In this bloodshed, market cap of BSE-listed companies fell by 21.5 lakh crore. Sensex closed 4000 points lower and Nifty settled at 21,884.50.
Brokerage firm UBS wrote in a note that the market was not expecting the current Lok Sabha election outcome. A better-than-expected performance by the INDIA alliance is responsible for the market crash. Even after getting 290 seats, NDA may form a thin majority government and BJP will have to depend on the alliance due to receiving lesser than expected seats on a standalone basis.
UBS also said that the counting of votes suggests a much weaker mandate for NDA. Brokerage firm UBS has presented three scenarios that it believes, will be taken negatively by the market. Let’s look at the scenarios
Scenario 1:
Under this UBS explains what might happen if Modi comes back as the Prime Minister. They suggested that he will be carrying along the alliance partners (sharing ministry portfolios). The government may not function as smooth as the last 10 years when PM office had a strong control over all government machinery.
Scenario 2:
NDA forms government but with a new prime minister other than Modi.
Scenario 3:
Some of the key alliance partners of the BJP switch sides and the opposition I.N.D.I.A alliance comes to power.
UBS said that Scenario 1 would be the most positive for the markets. India valuations have been expensive for ordinary corporate earnings growth/outlook. UBS has compared the Indian market with other Emerging markets. It remains “underweight” on the Indian market.
UBS Predictions
Almost a week earlier UBS UBS also came up with four scenarios for investors. In the worst scenario, they warned of equity valuations falling to pre-NDA levels if BJP loses. UBS also said that if BJP gets fewer seats then it can forms a government with the NDA. But here market could be slightly less confident because there might be pressure from other political alliances. Although, they said that overall macro stability could persist but indicated towards mixed impact on financial markets.
Brokerage firm UBS said that market was not expecting the current Lok Sabha election outcome. They have come up with three scenarios on India strategy. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
