The Indian stock market has seen increased volatility, with the Nifty 50 down more than 4% from its all-time high. Uncertainty surrounding the ongoing Lok Sabha elections, weakness in global indicators, lackluster fourth-quarter results and persistent selling by foreign institutional investors are weighing on Indian stocks.
An important trigger for the market will be the Lok Sabha election results to be announced on June 4. Opinion polls predict that the ruling Brutiya Janata Party (BJP) will win a healthy majority in parliament and Prime Minister Narendra Modi will remain in power for a long time. Since his third term, there have been growing concerns about low voter turnout in the first three stages of elections.
This has triggered an important debate among investors as to how the stock market will react if the BJP fails to win a majority in the INDI coalition that forms the government.
Also read: Could the Indian stock market crash further by the Lok Sabha election results?
Users on the social network forum Reddit pondered whether the stock market would fall if the INDI coalition came to power.
Most users expect a sudden reaction if the BJP loses power, but expect the market to continue to grow in the long run, regardless of the party in power.
“It doesn’t matter which party is in power. At the end of the day, these are all capitalist parties and India will continue to grow as an economy for at least the next 30-40 years. Markets will panic; As the noise gets louder, long-term investors will continue to accumulate wealth by accumulating blue-chip stocks,” a user commented.
Also read: 2024 General Election: Experts warn against push buying amid falling market.they say this
Others speculated that it was because the Indian National Congress-led United Progressive Alliance (UPA) returned to power in 2008, when the Indian stock market hit a 20% cap and trading was halted for the day.
“Therefore, it doesn’t matter in the long run who is in power as the Indian economy will only continue to grow. But if the Modi government fails to come to power again, there will be a sudden reaction in the short term.” But it’s clear,” said another user.
But some believe that a market decline presents the best opportunity to pick up blue-chip stocks that were missed during the bull market.
One user also opined that even if the market falls off a cliff, it could recover very quickly with strong macro-led initiatives.
Also read: Samco Mutual Fund’s Viraj Gandhi says markets will remain volatile until after the 2024 general elections.
“Instead of sliding, we fall off a cliff. But the recovery will happen very quickly. We cannot artificially keep the Nifty below 20 PE for too long. And we are in a bullish cycle instead of a bearish cycle. Yes, it cannot continue to fall unless there is a macro trigger at the market level. Market macros are positive at the moment, so the election result will be something of a pit stop. The pit stops will take longer, but the cars will continue racing on the circuit while bored spectators watch and wait for the next overtake in three months,” the user commented.
Some noted that markets prefer stability, and that a weakened coalition government could pose risks to markets.
“Markets like stability. If there is uncertainty or instability, prices will fall…A stable government would be good for the market…” he said.
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