You are here: Home » Markets » News
Business Standard
Web Exclusive

Delhi poll outcome at best may see a knee-jerk reaction in markets

Though the benchmarks may remain choppy on the outcome day and a loss for the Narendra Modi - led BJP is not yet discounted, the bigger issue for the markets is now a pick-up in the economy.

Puneet Wadhwa  |  New Delhi 


Outcome of the Delhi Assembly polls due February 11 can at best trigger a knee-jerk reaction in the that can be used to buy for the long-term, say analysts. Though they caution that the benchmarks may remain choppy on the outcome day and are not yet discounting a loss for the Narendra Modi – led Bharatiya Janata Party (BJP), the bigger issue for the is now a pick-up in the economy, growth in corporate earnings and global cues.

“The elections will be keenly watched by political observers, but I do not see much impact on the in case the BJP / National Democratic Alliance (NDA) were to lose or win. There can be, at best, a knee-jerk reaction to the assembly poll outcome in Delhi. That apart, Delhi has very less seats in the Lok Sabha. This is unlikely to pose a threat to the policy decisions at the national level going ahead. The markets are now looking forward to global cues, pick up in the economy and corporate earnings growth for further direction. However, they are not discounting a BJP / NDA loss as of now,” explains G Chokkalingam, founder and managing director at Equinomics Research.

In the last two years – 2018 and 2019 – as many as 13 states went to polls, including Maharashtra, Haryana, Rajasthan, Madhya Pradesh and Karnataka. The NDA, that is BJP along with its allies, were able to form the government in just five of these states. While they were the single largest party in Maharashtra, the Maha Vikas Aghadi (MVA) – a political coalition formed after the 2019 assembly election in the state under the leadership of Sharad Pawar of the Nationalist Congress Party (NCP), Uddhav Thackeray of Shiv Sena and Sonia Gandhi of the Indian National Congress (INC) – eventually formed the government.

In the recently concluded assembly polls in Haryana, too, the Narendra Modi - led BJP saw its numbers reduced. The BJP, which had formed government for the first time on its own in Haryana by winning 47 of the 90 seats, and had set a target to win more than 75 seats in 2019, but could manage only 40, falling short of a simple majority by six.

“BJP / NDA has been steadily losing vote-share in assembly elections and this is evident from the outcome of the polls since the past couple of years. Though at the Centre, they have been able to hold fort, assembly elections are a different ball-game. Delhi has also been in focus as the city is the national capital and the ‘power center’. The markets will be mindful of this and any negative outcome can trigger a knee-jerk reaction in markets. As things stand, markets are not discounting a BJP loss. That said, long-term investors can use the opportunity to buy,” says A K Prabhakar, head of research at IDBI Capital.

In the 2015 Delhi assembly polls, Arvind Kejriwal – led Aam Aadmi Party (AAP) made sweeping victory and bagged 67 of the 70 seats, while the BJP could only manage three. The corporation polls / civic body polls held recently, however, painted a different picture where the BJP swept to power.

Markets and Delhi elections

Markets and Delhi elections

First Published: Fri, February 07 2020. 07:36 IST