Most of my friends keep asking me what will happen to the Stock markets after the elections. I am not somebody who can predict the results of an election, therefore I would not like to venture into that. What I would rather do is contemplate on the possible outcomes of these elections.
Scenario 1. NDA wins with BJP getting past the 272 mark: The markets will celebrate this victory by showing us a new High and the business confidence index will pick up like never before. a Sensex of 50K and NIFTY of 15K cannot be ruled out with such results.
Scenario 2. NDA gets a majority but BJP does not cross 272. This is a highly difficult situation. If the NDA partners stick together then they will ask for a replacement of Modi and the contest for the PM's Post opens up, pitching Nitin Gadkari or Sushma Swaraj in the center of the ring. This scenario will see Stocks taking a pause and the NIFTY will meander between 10K and 12K till the picture is clear and a new budget gives the direction of the market.
Scenario 3. NDA does not get a majority and BJP fares very badly. This is a scariest scenario as it opens up close to two dozen PM aspirants and anybody with 30-40 MPs decides who would be the PM. Such a scenario would make the market hit lower circuit on the results day. The markets will take a hit of minimum 25% and NIFTY would near 8500 or lower and Sensex would near 24k-25k making it a scary scenario. The markets will continue to go into a bear phase and would only rise after 2-3 years (as that would be realistic level of such a government's tenure). 2021-22 would see a new General elections again.
P.S. I do not see Congress forming a government under its leadership or at least under the leadership of Mr. Rahul Gandhi as he does not have the acceptability amongst non NDA parties. A Third Front Government is also not in the offing as any non-BJP government cannot be formed without the inclusion of Congress or the "External Support" of Congress
So let's keep our fingers crossed, keep an eye on the Satta market and the Forex market to provide us clues.
Until then let's meet on 23rd May.
