An INDIA alliance victory will lead to de-rating of markets: Brokerage report

Markets have been nervous for the past couple of weeks and sustained volatility in the run-up to June 4 seems likely.
An INDIA alliance victory will lead to de-rating of markets: Brokerage report

NEW DELHI: If Congress-led INDIA alliance comes to power, it will lead to de-rating in markets and in specific sectors such as defence, capital goods, tourism, PSU’s (including banks), drones, AMC, wires and cables, plastic pipes and EMS, said brokerage firm Prabhudas Lilladher in its ‘India Strategy Report – Mandate 2024, Brace of Volatility’ report on Friday.

The report comes as India completes the 4th phase of what it calls the most ‘hotly contested Lok Sabha elections in its history’. It added that the narrative of NDA falling short of a majority or INDIA alliance coming to power is raising their head, at least in social media and global press. Most brokerages and opinion polls, however, still feel a win for the Prime Minister Narendra Modi-led BJP.

Markets have been nervous for the past couple of weeks and sustained volatility in the run-up to June 4 seems likely. Fear around a repeat of UPA victory in 2004 is making markets nervous as the unexpected event had resulted in a 15% decline in Sensex in a single day.

Owing to low voter turnout, the market experienced a major correction last week with the benchmarks (BSE Sensex and NSE Nifty) plummeting 2% each. The bloodbath was more visible in the midcap and small-cap stocks.

The market, however, made a quick recovery this week as low inflation data in the US raised chances of at least two rate cuts by the Federal Reserve in 2024, a big positive for the market. Sensex gained 2.7% this week to close the Friday session at 73,917 while Nifty settled 2.3% higher at 22,466.

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