Exit polls are pointing towards a Congress victory in Karnataka. Can it affect the market?

As Peppermint As reported earlier, the Congress in Karnataka is likely to overtake the Bharatiya Janata Party (BJP) and perhaps even win its own majority in the 224-member assembly, according to several exit polls on Wednesday after voting ended in the southern states. It was predicted. State. The counting of votes will take place on May 13.

Seven of the eight major exit polls had predicted that the Congress would overtake the incumbent BJP. Four of these polls have also predicted that the opposition party could cross the majority mark of 113 on its own, something it has done only once in the last two decades. Three others said the Congress would emerge as the single largest party but would fall short of the majority mark, Mint reported.

Analysts believe that if the Karnataka election results turn out as per the exit poll predictions, it will not have much impact on the market sentiment.

Sensex opened 218 points higher at 62,158.10 against previous close of 61,940.20, following last evening’s exit poll estimates, but traded in a range during the session.

G Chokkalingam, Founder & Head of Research Equinomics Research & Advisory He believes that even if the ruling party loses power in Karnataka, it is unlikely to have an adverse impact on the market.

Chokkalingam pointed out that Karnataka has only 5 per cent of the total Lok Sabha seats in the country and even if the ruling party loses 50 per cent seats in the Karnataka assembly elections, its arithmetic effect would be around 2.5 per cent. Of the total Lok Sabha seats in the country

“Since the ruling party has more than 11 per cent additional seats than the required minimum absolute majority in the Lok Sabha, we believe that there will be no serious implications for the final result of the Karnataka Assembly elections, as predicted by the exit polls.” There will be no domestic equity market,” Chokkalingam said.

He also pointed out that India’s macroeconomic fundamentals are turning extremely positive for India.

“India is one of the fastest growing major economies in the world. Strong credit growth, capex plan of the central government, domestic service activities as well as service exports, and high quality of banking as well as freight handled by ports and railways Volume of assets, strong inflow of remittances, aggressive PLI plans, expectation of record crop production, normal monsoon forecast, significant reduction in inflation, etc., will augur well for the markets. Hence, political outcome from one state will dampen the optimistic outlook. markets in the short term,” Chokkalingam said.

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Similarly, VK Vijayakumar, Chief Investment Strategist Geojit Financial Services They believe that if the actual election results reflect the results of the exit polls, the market will not be affected as the result is in line with expectations. However, in case of divergence, some impact may be seen in the market.

Vijayakumar said, “The exit polls indicate a lead for the Congress. This is in line with market expectations to some extent. However, if the actual result diverges sharply from the exit poll projections, it will send the market either way.” will affect.”

“For example, if the Congress wins decisively and can rule without the support of the JDS, it will be a blow to the BJP. It will force the ruling dispensation to become more populist, which will negatively impact the market. On the contrary, if the BJP creates a surprise and wins the election, it would be a major achievement for the ruling government. Such a result could have a positive impact on the markets,” Vijayakumar said.

Disclaimer: The views and recommendations in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to do due diligence with certified experts before making any investment decision.