Stock Market Forecast: Bear or Bull? What Dalal Street is expected to witness in 2019 Lok Sabha Elections season - Analysis

The month of March which is also the financial year end has turned out to be quite fruitful for Indian markets. Both Sensex and Nifty have risen over 1,600 points to 480 points in just 12 days of this month. Investors have been very optimistic in Indian equities, however, the next big thing would be General Elections 2019 which is going to begin from mid-April 2019. It is being known that the next course of investors reaction will revolve around elections, and for your information, it is not seen as good news to Dalal Street. According to media reports cited by ICICI Bank, markets will see choppy movement in the midst of elections. Hence, the rally party is seen to get over soon for Sensex and Nifty. 

On Tuesday, Sensex was trading at 37,520.08 surging by 465.98 points or 1.26% at around 1450 hours. On the other hand, Nifty 50 jumped by over 134 points or 1.20% trading at 11,302.05 at the same time. Interestingly, in one day, both Sensex and Nifty have touched an intraday high of 37,549.30 and  11,310.90 respectively.

But from February 2019 end to till date, Sensex has rocketed over 1,682 points, whereas Nifty has climbed by 518 points. On February 28, 2019, Sensex and Nifty finished at 35,867-level and 10,792-mark respectively. Hence, March month so far has been the best for Indian markets.

Coming to elections, it is being seen to take place over six weeks starting from April 11 to May 19,2019 in seven phases. As per ICICI Bank data, the voter base is estimated at 900 million people, with 84 million new voters as compared to 2014.

With the announcement of the election dates, the model code of conduct - a guiding principal for political parties and electoral contestants comes into effect immediately, which will be in place until election results are announced on May 23rd . The Election commission has also extended these codes and pre-certified political advertising rules to all social media platforms this time.

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Ashray Ohri and  Kamalika Das analysts at ICICI Bank said, “Indian markets have seen some traction in FPI inflows coming into equity markets in the past few days although we have underperformed our EM peers for the first two months of this year. Elections are a binary event and domestic markets will witness choppy movement until exit polls and results are announced.”

Apart from elections,  global developments such as US-China trade issues, Brexit negotiations etc. would also be important.

Another important event domestically would be the April monetary policy, where ICICI Bank expects another rate cut. 

On rupee, the duo at ICICI Bank says, “We expect the rupee to trade in the broad range of 69.00-72 and the 10 year G-Sec yields (new benchmark) trading in a range of 7.25- 7.50%. Spikes beyond these ranges are possible intermittently, depending on how the above mentioned developments evolve vis-à-vis market expectations.”