Dalal Street To Cheer BJP Uttar Pradesh Victory On Tuesday
It is not the Bharatiya Janata Party's (BJP) victory in Uttar Pradesh, but the huge margin with which it has won that will boost equity markets when they reopen on Tuesday, say expert investors.
This is a larger margin of victory than what everyone was expecting, so obviously, this is a big positive for the market. Market movement will depend on few global factors, and if they are supportive, which they have been, I wouldn't be surprised if the market touches an all-time high.Andrew Holland, Chief Executive Officer, Avendus Capital Alternate Strategies
Year-to-date the Nifty 50, India's benchmark equity index, has risen over 9 percent - the highest gain in the same period over the last five years. It is currently just over 184 points away from its all-time high of 9119.20 (March 2015)
The market has already discounted a good BJP performance in UP, but this has exceeded the expectations. So, I have no doubt that market is going to open with a big gap up on Tuesday. We are very much amid a bull market and an event like this will only propel the bull market, but ultimately it should be fundamentals that determine the pace of the bull market.KR Bharat, Managing Director, Advent Advisors
Those fundamentals include most immediately the possibility of another rate hike by the U.S. Federal Reserve when its Federal Open Market Committee meets on March 14 and March 15. Bloomberg data indicates futures traders now see a hike as a sure thing. Higher interest rates in the U.S. could impact fund flows to emerging markets like India.
Soon after, corporate earnings data for the January - March 2017 quarter and financial year 2016 - 17 will help determine market direction.
Adding to the mix will be the interest rate outlook in India. The Reserve Bank of India's decision to keep interest rates unchanged in its February policy was followed on March 10 by another inflation warning.
Policy decisions such as progress on resolution of the over Rs 7 lakh crore bad loan problem or implementation of the Goods and Services Tax (GST) could also prove to be key triggers for equities.
To a great extent, this win has been priced in and from now on, the market will be keenly watching jobs, development, activity in infrastructure, and implementing GST with full force. Undoubtedly markets will open higher on Tuesday.Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company
Continuing mutual fund investments - as of February there have been 11 straight months of equity inflows - will also help stocks climb higher.
On Friday, after the exit polls were announced and the last trading day before the votes were counted, the NSE Nifty 50 Index ended 0.08 percent higher at 8,934.55 points. as experts have pointed out next week might see it make bigger moves.
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