News

Published: October 3, 2024
Updated: October 3, 2024

Haryana and J&K Exit Polls 2024: Potential Impact on Sensex and Nifty

Stock Markets Bracing for Election Results

The outcomes of the recent state elections in Haryana and Jammu & Kashmir are not expected to drastically shift the market landscape but may still keep investors on edge. Exit polls suggest losses for the ruling party in both states, raising concerns about how the results might affect market sentiment. Despite this, analysts believe that broader market dynamics are more influential than the regional election results.

Projected Election Outcomes

In Haryana, the exit polls predict a majority win for the opposition, securing 50-58 seats out of the 90-seat assembly, marking a significant gain compared to the 2019 polls. The ruling party, which aimed for a third consecutive term, is expected to fall short with only 20-28 seats, a significant drop from its previous tally of 40. Meanwhile, in Jammu & Kashmir, the Congress-National Conference alliance is projected to win 40-48 out of 90 assembly seats. The ruling party is expected to secure 27-32 seats, with the remaining seats split between smaller parties and independents.

Market Dynamics: Headwinds and Tailwinds

Stock markets appear to be caught in a balancing act, influenced by both positive and negative forces. On one hand, the recent monetary stimulus from China has led to tactical outflows from Indian markets, while corporate earnings are showing signs of slowing after several years of robust growth. The impact of commodity prices and the fading benefits from the banking sector’s improved asset quality have further added pressure. On the other hand, the festive season and better-than-expected monsoons have fueled hopes of a recovery in rural consumption, which could provide a short-term boost to economic activity. Additionally, global central banks, led by the US Federal Reserve, are shifting towards a more accommodative monetary stance, which could create a favourable environment for riskier assets.

Earnings Outlook and Valuation Concerns

For the upcoming quarter, earnings growth is expected to be moderate, with the broader market facing valuation challenges. The narrowing market breadth and the high premium of mid-cap stocks over large-cap stocks have complicated the investment landscape. However, some companies in both large-cap and mid-cap segments are still considered promising in terms of growth potential.

Volatility Expected as Elections and Markets Collide

While the election results in Haryana and Jammu & Kashmir may not be major drivers of market movement, they contribute to the broader narrative of political uncertainty that could influence investor sentiment. The combination of geopolitical tensions, fluctuating global markets, and domestic economic factors means that volatility is likely to persist. Investors will be closely watching for signals from both election outcomes and broader market trends to gauge future movements in the Sensex and Nifty.