If outcome defies exit polls, disaster awaits market

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MUMBAI: Thursday’s exit polls forecasting a BJP victory in all states but one won’t come as a surprise to the markets, which may rise moderately on Friday.

But if the results pan out differently, a sharp rise or fall would be in the offing. The two variant scenarios are that BJP wins UP by a clear majority — in which case fresh buying would result in a sharp upmove, or the SP-Congress alliance emerges victor — which would cause the market to tank.

Two out of six polls give the BJP a clear majority in UP, while the other four say it will emerge as the single-largest party. The SGX Nifty, that trades in Singapore, traded flat at the time of writing after exit polls indicated that BJP would emerge as the single largest party in UP.

“The market has already priced in BJP’s victory in four out of five states. If the actual results are per predictions, the Nifty could gain up to 200 points; else the market would correct sharply,” said Nilesh Shah, MD, Kotak Mutual Fund.

“However, a clear majority for the Bharatiya Janata Party (BJP) in UP could trigger fresh buying by FIIs, who were sitting on the sidelines for last few months,” he added.

Chanakya says BJP will win 285 out of the 403 seats in Uttar Pradesh. The India Today-Axis poll pegs the figure at 251-279, and C-Voters poll forecasts 161 seats for the party. The Times Now-VMR exit poll predicts the BJP will win a higher number of seats — between 190 and 210 seats. ABP’s exit poll projects BJP will win as many as 185 seats of the 403 assembly seats, 16 seats short of a majority.a

Like ABP, the NewsX-MRC exit poll also projects BJP winning 185 seats in the state. The exit polls which were unveiled post the market hours on Thursday predicted a Bharatiya Janata Party (BJP) victory in Uttar Pradesh, Uttarakhand, Goa and Manipur with a loss only in Punjab.

Markets on Thursday traded flat as investors adopted a wait and see policy ahead of the state assembly election results on Saturday. While the Sensex gained 27 points, or 0.09%, to close at 28,929, the NSE Nifty ended flat at 8,927 on Thursday.

“We are going to see a good rally in markets in the mid-term if BJP comes to power in UP and other states. But in the short-term, the market has already discounted the BJP victory,” said Motilal OswalBSE 0.92 %, chairman, Motilal Oswal Financial ServicesBSE 0.92 %. “Modi could go for major reforms if he wins the UP elections”.

FIIs net bought Indian equities worth a Rs 488 crore on Thursday while domestic institutional investors net sold Indian equities worth just Rs 10 crore, according to stock exchange provisional data.