BJP win in Lok Sabha 2024? How money managers are reading political winds

With 2024 approaching, people across the world are keeping a keen eye on who will come to power in India after the crucial Lok Sabha elections.

After the Bharatiya Janata Party (BJP) registered a resounding victory in the election in three Hindi heartlands, money managers are very much in favour of the Narendra Modi-led government returning to power in the 2024 Lok Sabha elections.

The BJP dethroned the Congress in Rajasthan and Chhattisgarh, while retaining the state of Madhya Pradesh with a massive majority. With this victory, the party has set the mood for the general elections in 2024.

BJP ‘most likely’ to retain power: Fitch

Rating agency Fitch said there is a likelihood of policy continuity to be maintained in India as the incumbent administration is “most likely” to retain power in the 2024 Lok Sabha elections due in April-May.

“We believe it most likely that incumbent administrations will retain power in India (BBB-/stable) during the general elections in April-May,” Fitch said in a statement.

The rating agency said the size of the majority of the next Indian Parliament, however, could influence the ambitiousness of the administration’s reform agenda.

‘… Modi win in 2024 polls’: Jefferies

Global brokerage firm Jefferies said the win of the BJP in the recently concluded Assembly elections has “reinforced consensus expectations of a Modi win in the 2024 national poll.”

The BJP’s win in three states is much better than what exit polls suggested, analysts at Jefferies said.

“Competitive populism from both the BJP and Congress is also clearly visible,” the brokerage said.

Jefferies analysts also said the boost to investor sentiment should augur well for domestic cyclical sectors.
Among the sectors, Jefferies is bullish on banks, industrials, power, property and midcaps.

BJP policy continuity at the centre in 2024: BofA

According to Bank of America, or BofA Securities, a better-than-expected outcome for the BJP reinforces policy continuity at the centre in 2024.

The government has announced a few populist measures including cut in LPG cylinder prices, extension of the free food grain programme for five years, the brokerage said, adding that it believes some more could be announced in the run-up to the election.

BofA said it does not see it impacting the government’s fiscal consolidation path.

“Better-than-expected tax revenues may offer additional resources, allowing the fiscal deficit to stay on course to achieve the targeted 5.9 percent of GDP in FY24,” the BofA Securities analysts said.

‘… a clean sweep for the BJP’: Nomura

Analysts of Nomura in a recent report said the strong performance of the BJP in the Assembly elections suggests the current BJP government is retaining the support of the electorate in the states where it did well in the 2019 general elections.

The win of BJP in state polls should somewhat allay market concerns around political risks into the general elections, Nomura added.

“It indicates that there is broad political support for the BJP and PM (Narendra) Modi, and reaffirms the early opinion polls for the general elections that have so far predicted a clean sweep for the BJP,” Nomura said.

Most of the BJP’s seat share was concentrated in large states of Northern and Western India. In most of these states, the BJP won a significant number of seats, which leaves limited room for upside, the brokerage firm said.

With inputs from agencies