A research report by Morgan Stanley suggests that the important domestic stock indices such as BSE Sensex and NSE Nifty are likely to advance by up to 10 percent, and then the market may face a 5 percent gain to a 40 percent fall in proportion to the election results, in anticipation of the Modi-led NDA government getting a clear majority in the 2024 general elections. “One hundred crore voters; will they please the market?” The report released on September 3 is titled.
On September 1, Sensex closed at 65,387 levels. According to this, a 10 percent advance before the elections could take the Sensex to 72,000 levels by next May. It is concluded that the election will not be early. But if the general election is called early, the market rally may be concentrated in the short term. Meanwhile, the post-election volatility in the market is backed by past history. The research report points out that the volatility is likely to be tougher this time.
Post-election prospects
Morgan Stanley predicts that the stock market may face a 5 percent gain to a 40 percent fall in the market depending on the results of the next Lok Sabha elections. In 2004, when the Vajpayee-led NDA government was defeated, the stock indices suffered a 17 percent correction. Taking this as an example, the report explains the market prospects for a period of three months after the 2024 elections.
- 260 seats for BJP – Up to 5 percent advance in Sensex.
- If it gets 240 seats – the Sensex index may face a correction of 5 to 7 percent.
- Below 225 seats – 20 to 25 percent fall in stock indices.
- Below 200 seats – 30 to 40 percent fall in major stock indices.
At the same time, the coalition government itself cannot be claimed to be a hindrance to economic growth. Only two (2014 and 2019) of the eight general elections held in the last 32 years have been won by a single party. Real GDP growth for the fiscal years 1993 to 2023 is 6.2 percent per year. In dollar terms, the market has gained more than 7.3 times over the same period.
