Stock Market Crash - Nifty to fall below 20,000? after LS Election Results
PM narendra modi will return to office, but under new conditions, according to Emkay Global, even if the bjp falls well short of a majority in the lok sabha election of 2024, which startled the financial market by giving the BJP-led nda a reduced majority. The brokerage business stated that it anticipates a short-term stock market depreciation since capital goods and PSUs are the most susceptible industries. However, the brokerage stated that value merchants might see significant profits and that spending could rebound.
"The broad direction of the economy is unlikely to change, though factor market reform and privatization are off the table. india is likely to now derate due to higher risk perception. Switch from PSUs and capital Goods to FMCG and buy indian equities if the Nifty falls below 20,000 (18 times FY25 PER)," Emkay Global said.
"The bigger surprise is that the bjp, on its own, is set to miss the majority mark, with around 230-240 seats," the statement continued.
According to Emkay, if some of the BJP's current allies defect, there's a chance that the opposition might take power.
"It seems doubtful that the major foundations supporting India's economic progress would shift. The necessity of manufacturing in creating jobs means that this concentration will not waver. Though we believe it would not be significant, there may be a slight move back towards stimulation from consumption. We see no danger to the reduction of the Central budgetary deficit, but state budget deficits may become worse," the report stated.
The brokerage claimed, "Factor market reforms like those related to land, agriculture, and labour are now off the table, in our view," while recommending equities to purchase after the market drop. Risks include asset monetization and privatisation, which might short-term delay government capital expenditures. It is currently improbable that some political reforms, such as harmonising elections (which need significant constitutional amendment), will occur.