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Markets and the election

Markets and the election

The stock market is waiting on tenterhooks for the results of the Lok Sabha elections on June 4. The major players in the stock market naturally have a lot at stake, depending on which Party comes to power.

Indian billionaires have prospered under the Modi government and therefore, should the Congress come to power, their welfare schemes running into lakhs of crores would mean additional tax burdens on the people and corporates which means a dwindling of profits.

So, what exactly would be the stock market’s reaction be after the results are announced? By and large, the corporate world feels that the Modi government would come to power again. 

However, if the BJP doesn’t get an absolute majority on its own and needs the support of its alliance partners, there could be a correction of 10% in the markets. Should the BJP cross its ambitious target of 400 this time, there could be a significant bull run.

By and large, the majority opinion is that the NDA would likely win from 320-330 seats and there wouldn’t be any dramatic upset. 

Nevertheless, given that the ‘India Shining’ campaign of 2004 did not bring the BJP to power for a second term for Atal Bihari Vajpayee, there are a few skeptics still out there albeit in a rare minority.