The verdict of the state assembly elections are out. Both Maharashtra and Jharkhand saw the existing Governments being voted back to power and most importantly, BJP’s seat count has increased to 132 in Maharashtra compared to just a tad above 100 in 2019. All of this ties-in well with the positive global cues coming and signals the rally continuing for the markets. Experts believe that the stage is now set for renewed focus on capex.
The last 5 years in Maharashtra were characterized by political instability with frequent musical chairs at work. With this verdict, the political stability will surely bode well for effective governance and infra development.
Political momentum likely to push markets higher
Markets have had a decent correction in the last two months with Nifty/Nifty Midcap 100/Nifty Smallcap 100 correcting by 10% on the back of moderate corporate earnings in H1FY25, relentless FII selling since October 24. Most market experts belief may be the indices are finally moving past the correction zone and are watching out for significant positive momentum following the recent downtrend.
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Gautam Duggad, Head Of Research, Director – Institutional Equities at Motilal Oswal Financial Services pointed out that “With elections now behind and BJP getting a strong boost from Haryana and Maharashtra elections, we expect the government to spring into action and start the spending. H1FY25 Govt spending is flat YoY and is down 17% for capex spending. This coupled with recovery in rural spending on the back of good monsoon and expected strong Kharif output should improve the demand narrative at the margin. Wedding season in the H2FY25 (30% higher weddings YoY) could also provide a fillip to demand. So both capex and consumption can see some bounce-back.”
Anshul Jain, Head of Research at Lakshmishree investments added that “The BJP’s thumping victories in Maharashtra and Haryana are set to spark a bullish sentiment in the Indian stock market. This political stability is likely to lead to a gap-up and the rally could extend to 24350-24600 levels,
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