Markets not yet factoring a major upset for BJP in upcoming state elections

Markets, according to analysts, have not yet factored in the possibility of a major upset for the Narendra Modi-led Bharatiya Janata Party (BJP) / National Democratic Alliance (NDA) in the upcoming elections in five states – Chhattisgarh, Rajasthan, Madhya Pradesh, Mizoram and Telangana.

The polls are being viewed as a run-up to the general elections scheduled for May 2019 and will test the popularity of the government and its policies amid rising crude oil prices that can trigger a rise inflation going ahead, developments pertaining to bank and non-bank finance companies (NBFCs) and a sliding rupee.

“The markets are gradually realising that it will not be easy for the NDA to secure a simple majority in key states. Given the other domestic and global cues, they are likely to remain choppy ahead of the event and are yet to fully price in a major upset for any pan-India political party in the upcoming state elections,” says G Chokkalingam, founder and managing director at Equinomics Research.