Garg feels market has already discounted the fact that BJP is going to win a greater number of seats than its previous tally of 3 seats
The market seems to have priced in the likely defeat of BJP in Delhi elections 2020, though the winning of seats is expected to be higher than previous elections. In fact, the results seem to be on the lines of exit poll trend which predicted the Aam Aadmi Party winning again.
Apart from China’s wide-spreading novel coronavirus impact, the Delhi assembly elections was also one of reasons for correction seen in the market in previous two consecutive sessions.
The benchmark indices recouped their two-day losses on Tuesday as the BSE Sensex was up 341.51 points at 41,321.13, and the Nifty50 climbed 108.80 points to 12,140.30 at the time of publishing this copy.
The market reaction indicated that uncertainties related to Delhi polls are over now and the focus shifts back to global cues, experts feel.
“Delhi elections outcome will have some minor immediate impact but not large as there are no negative surprise elements as various opinion polls in the run-up to the election have already shown decisive defeat for the BJP. We expect a reduction in political posturing and uncertainties as the election is over,” Vineeta Sharma, Head of Research at Narnolia Financial Advisors told Moneycontrol.
Gaurav Garg, Head of Research at CapitalVia Global Research – Investment Advisor also said equity market would be reacting to Delhi’s assembly election only to a certain extent.
Aam Aadmi Party was leading in 57 seats, while BJP was leading in 13 seats but Congress had not opened its account, at the time of publishing this copy. The majority mark is 36 to get on to Delhi assembly.
“AAP has won more than 95 percent seats last time. This is possibly the best ever performance by any political party in any election in a 3-way contest. So, repeating that performance is close to impossible and is a remote possibility,” he added.
Garg feels market has already discounted the fact that BJP is going to win a greater number of seats than its previous tally of 3 seats. “There would hardly be any reaction from the market on this.”
Markets always like stable government with no uncertainty and hence, a stable government with clear mandate can cheer D-streets to some extent, according to him.
The market climbed back to the highest point seen in last two-weeks after the end of uncertainties related to budget and Delhi polls, but overall it has been rangebound and that trend is expected to continue going ahead due to concerns over global demand due to coronavirus which partly offset by the government’s measures to revive economy.
“We expect market to be rangebound with weak sentiments as global markets are witnessing some pressure due to novel coronavirus,” Garg said.
Globally, the markets have been assessing the impact of coronavirus on global economy as world’s second largest economy China is the largest consumer and supplier of several products. Several manufacturing plants are shut in China and several countries suspended flights to and from China as more than dozerns of countries reported coronavirus cases.
China itself reported more than 42,000 infected cases by virus and over 1,000 deaths.Major global companies like Qualcomm, Hyundai, Volkswagen, General Motors, Renault, Honda, etc. have warned about supply chain disruption.