Rural Focus A Must For BJP In All Elections From Here On, Brokerages Say

The Bhartiya Janata Party may have bagged a majority in Prime Minister Narendra Modi's home turf but the overall performance deteriorated in rural areas amid farm distress and rural disruptions, according to brokerages.

This signals towards increased rural focus by the BJP hereon. Considering that eight states in the country have Assembly elections lined up next year, a rural approach will help BJP add more states to its kitty, they said.

Here's what the brokerages had to say on Gujarat election results:

CLSA

• BJP will have to intensify pro-poor policies because of the close contest in Gujarat.
• Rahul Gandhi's ability to bring anti-BJP parties together for 2019 elections will be a close watch.
• Market comforted with BJP's 6th straight win int he state despite sort term disruptions.
• Relaxations in targets for inflation for fiscal deficits would be positive considering weak fiscal position in the state.

Also Read: ‘Gujarat 2017 Gives BJP And Congress The Face Saver They Need'

Citi

• BJP performed better in urban seats than rural therefore a rural focus in policies is expected hereafter.
• The verdict is unlikely to create any jitters but could make BJP more cautious in the run-up to the 2019 general elections.
• Rural pivot in policy focus will open interesting opportunities for equity investors.

Motilal Oswal

• Patidar agitations, Congress's alliance with Jignesh Mevani and Alpesh Thakore helped the opposition bag votes.
• PM Modi's popularity augurs well from the reforms perspective since BJP has won state elections repeatedly even after short term disruptions like demonetisation and Goods and Services Tax.
• This is positive for BJP before stepping into an election-heavy year.
• With the overhang of state election results behind, Motilal Oswal expect the market to revert to fundamentals.
• Second half of the current financial year should see sharp earnings recovery, led by low base of demonetisation and signs of pick-up in rural consumption even as the macros have come off a bit with the rise in crude oil prices, CPI inflation and 10-year bond yields.

Also Read: Gujarat Polls 2017: Heads I Lose, Tails You Win

Kotak Securities

• BJP will continue with execution of broader ongoing reforms in areas of fiscal (GST) and investment (ease of doing business).
• The party will also increase focus on specific programs to revive investment and the rural economy (increased spending on rural electricity, roads and water).

Edelweiss

• BJP should pick up the message from its weaker rural performance in Gujarat considering the election calendar for next year.
• A policy bias towards fiscal spend with rural focus is expected.
• Election cycle will add to the swings in the market.
• less conservative fiscal approach is expected.
• BJP may put greater emphasis on rural and agriculture sectors.
• Markets are becoming more sensitive to the election journey relative to economic and earnings trends, which we believe should be increasingly positive hereon.

Also Read: Gujarat Election Results 2017 | BJP Holds Fort But Not Without Cracks

Credit Suisse

• BJP is unlikely to interpret these results as business-as-usual.
• The opposition is starting to respond to BJP's lead in social media and is consolidating against it.
• Budget speech will focus on farm distress, and a ramp-up of direct benefit transfer on fertilisers, crop insurance, and innovative price guarantee schemes for farmers.
• Credit Suisse does not expect a fiscal slippage.

Axis Capital

• BJP's extended footprint to more states has positive bearings on federal institutions like Rajya Sabha and GST Council.
• With elections out of the way, the government and PM Modi can return their focus on reforms with renewed assurance from clear public support for their policies.
• A repeat of today's result in all of these upcoming elections are needed for the BJP to clinch simple majority in the upper house, potentially by 2022.
• Axis Capital said the central government will focus on implementation rather than big-bang reforms for the remainder of its tenure.
• Recommendations from the committee on direct taxes (expected end 2018) could provide the ammunition for a feel good factor before parliamentary elections.

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