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As Indian voters turn out to set record, stockbrokers get fidgety

Going by political overtures, regional parties appear to be nurturing their own dreams.

ETMarkets.com|
May 15, 2019, 12.10 PM IST
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Indian voters look determined to shatter past turnout records this election. Going by the trend seen till the end of the sixth phase of voting on May 12, brokerage Nomura India has projected that the ongoing elections may see record voter turnout of nearly 67 per cent, which would surpass the previous record of 66.4 per cent see during the 2014 Lok Sabha polls.

This is giving stockbrokers butterflies in the stomach, as a higher voter turnout tends to throw up unexpected verdicts in Indian elections.

The foreign brokerage noted that the incremental turnout has been more profound and concentrated in the ‘Hindi heartland’ states, a traditional vote bank for the incumbent BJP and pockets where the saffron party is banking on to succeed in its bid to return to power.

Analysts say while theoretical and empirical studies do not establish any causality between voter turnout and election outcomes, the likelihood of a hung Parliament is high.

For now, the market is expecting 245-250 seats for the BJP, said Raamdeo Agrawal, MD & Co-Founder at Motilal Oswal Financial Securities. “But ultimately, a prediction is a prediction. There will be mistakes. It could even be 300, it could be even little less than 245,” he said.

Swaminathan Aiyar, Consulting Editor at ETNow, says if the NDA gets 250 seats or more, it will certainly be able to get enough new allies to be able to form the next government.

“If the NDA tally falls to 230, we will most likely get a ‘third front’ government. A Congress-led government is unlikely. I do not think the polity is going in that direction, as in the case of Karnataka elections. Rahul Gandhi just offered unconditional support to a non-BJP government. There will be a similar kind of move if the opportunity arises in New Delhi,” he said.

Going by political overtures, regional parties appear to be nurturing their own dreams and are readying to pull strings.

There are many blocks which are coming victorious to from a non-BJP, non-Congress group, SP leader Akhilesh Yadav told ET last week. “KCR, Naidu are all trying. Mamata didi called us and all of us went. This will be an exercise that will happen after 23rd. Even in the past, we have had PMs from regional parties. But this time it will be a far larger non-BJP, non-Congress group,” he said.

KCR, short for K Chandrashekar Rao, leads Telangana Rashtra Samithi, the party that fought for and got the new Telangana state curved out of Andhra Predesh and rules it now. Chandrababu Naidu of Telugu Desam Party is the chief minister of the southern state Andhra Pradesh and Mamata Banerjee of Trinamool Congress rules Bengal down east.

These parties were scheduled to meet on May 21, ahead of election results on May 23, but indications are that the meeting will now take place after the outcome.

Naidu last week held closed-door discussions with his West Bengal counterpart Mamata Banerjee in Kharagpur on future plans for a grand alliance, called Mahagathbandhan.

The Congress, the largest opposition party with a national base, is not part of that equation yet. The party says it is not worried about whether the next prime minister is of its choice or not.

“Unsettling BJP is Congress’ main objective,” party leader and former finance minister P Chidambaram told ETNOW.

He said the party was looking at potential allies such as BSP, SP, Trinamool Congress and “perhaps the two parties in Telangana and Andhra Pradesh.”

Chidambaram also hinted at a fractured verdict. “Post poll, they will realise that in order to form a non-BJP government, all of us have to come together. It is quite possible that each one of them or one or more of them will try to lead such an alliance, but eventually the reality will hit everyone that all non-BJP parties have to stand together. We are prepared,” he said.

Motilal Oswal’s Agrawal said from the market’s viewpoint, the number of seats is not material, what would matter is the transition. “It is about stability. If there is a comfortable transition from one regime to the next, the market will be fine,” he said.

Aiyar expects the BJP to lose a substantial number of seats from its 2014 tally, especially in the north and west. “Gains in east and south will partly make up for it. On balance, I imagine the NDA will fall short of a majority. We will have a hung Parliament in all probability,” he said.

The fast-changing political scenario is making market participants wary of taking any major positions.

“The crack in the market has had its effect on the political analysts too, who started betting on lower NDA numbers taking hints from the market’s rocky behaviour. Just a few weeks ago, the same analysts had predicted a comfortable NDA win since the market was rising in full throttle. This proves the wavery mind of the political analyst, who dances with stock market volatility before the actual outcome,” Jimeet Modi, CEO, Samco Securities & StockNote, wrote in a signed piece this past weekend.
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