What’s the outlook for Indian Stock Markets for the next 3 months?
Politics is one of the major fundamentals in the movement of the Stock Market. Generally, markets react very sharply to any kind of unfavourable measures taken by the Govt for the economy. So when it comes to elections, the moment the ‘markets’ don’t get the desired result the reaction would be severe to watch. There are days when Stock markets have shown rapid upwards and downwards movement riding on the outcome of the elections. Till early 2012 stock markets were solidly behind UPA led by Congress. But a series of scams that took place later changed the sentiment and from mid-2013 it wanted the NDA led by BJP to come to power.
The measurement starts from February 2014, exactly 5 years ago when there were opinion polls that put NDA ahead of UPA. That is where Nifty started its journey from 6000. This mark of 6000 was reached way back in 2008 and from then on Nifty was stuck there. By the time results came towards the end of May Nifty scaled 7000. Then the victory of BJP in Maharashtra, Jharkhand and Haryana in late 2014 pushed it to 8000 mark. Just before the results of Delhi and Bihar in March 2015 Nifty scaled 9000. But the losses for BJP in both the states pushed Nifty back all the way to 7000 and from there it started its journey back again upwards. Just before demonetization, Nifty scaled 9000 again November 2016 but it took the massive victory of Uttar Pradesh in March 2017 that made Nifty to capture 10000. The subsequent victories in Gujarat in November 2017 and Karnataka in early 2018 pushed Nifty to 11000
Here are the dates of different elections in the past for your reference.
2014 May – General Elections
2014 November – Maharashtra, Haryana & Jharkhand
2015 March – Bihar & Delhi
2016 November – Demonetization
2017 March – Uttar Pradesh
2017 November – Gujarat
2018 April – Karnataka
2018 December – Madhya Pradesh, Chattisgarh & Rajasthan
If the things really turn out to be negative for BJP and if so-called 3rd Front supported by Congress forms the Government, we are to see a big fall in the markets and NIFTY could well go to 6000 mark yet again. This 6000 mark is something that Nifty tested in 2008, 2010 and 2014. Now we might go back to where we have started. Even if Congress forms a minority Govt also thing won’t be different and we might test the 6000 levels. In another scenario, if things change for good and BJP starts gaining its momentum in the last few left out days, with the mood of the Nation NIFTY will also react positively and it can hit 11,000 after the budget. This is only because of a positive feeling about the Govt.
Once the results come in for the BJP then we shall see the NIFTY moving all the way towards 12000 and by the time Modi takes the oath again, he will be welcomed by another all-time high of 12000 on Nifty, just like how it welcomed Modi in 2014 with an all-time high of 7000! So, interesting 100 days ahead of us!