BUSINESS

A triumph for the INDIA alliance would cause markets to derate: brokerage report

According to brokerage firm Prabhudas Lilladher’s “India Strategy Report – Mandate 2024, Brace of Volatility” report released on Friday, if the Congress-led INDIA alliance wins power, there will be a de-rating in the markets and in certain sectors like capital goods, tourism, defense, drones, AMC, drones, drones, plastic pipes, and EMS.

 

As India wraps off the fourth round of what it describes as the most “hotly contested Lok Sabha elections in its history,” the report is released. It also said that the story of the NDA failing to get a majority or the rise of the INDIA alliance is becoming more prevalent, at least on social media and in international media. However, the majority of brokerages and opinion polls continue to believe that the BJP, headed by Prime Minister Narendra Modi, has won.

The last several weeks have seen uneasy markets, and prolonged volatility in the lead-up to June 4 appears inevitable. Markets are uneasy due to fear of a recurrence of the UPA triumph in 2004, which saw a 15% drop in the Sensex in a single day due to an unforeseen incident.

The market saw a significant correction last week due to poor voter participation, with the benchmarks (BSE Sensex and NSE Nifty) falling 2% apiece. The midcap and small-cap stocks displayed the carnage more clearly.

On the other hand, this week’s low US inflation statistics increased the likelihood of at least two rate cuts by the Federal Reserve in 2024, which was a huge plus for the market. This week, the Sensex increased by 2.7% to end the Friday session at 73,917, while the Nifty finished 2.3% higher at 22,466.

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