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Exit polls: Nifty may target fresh peak, but wild swings unlikely

Dalal Street could be back to the normal range by the end of the session, say experts.

, ETMarkets.com|
Updated: May 20, 2019, 07.50 AM IST
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The market is likely to see one of its most volatile days in the coming week, said Milan Vaishnav.
NEW DELHI: Exit polls released on Sunday mostly pegged a majority for the BJP-led NDA, which analysts say is slightly better than market expectations. They expect a gap-up opening for the market on Monday morning, but they don’t expect an over-the-board reaction.

They feel Nifty may attempt to scale 11,700 level, sustenance of which will depend on how many seats the BJP gets on its own.

Times Now-VMR pegged total seats for the BJP and allies at 306, well beyond 272 needed to retain power. Republic-CVoter sees BJP-led NDA winning 287 seats, while News Nation’s poll estimated NDA seats in 223-290.

Rusmik Oza, Head of Fundamental Research at Kotak Securities, said the buffer between NDA projection and halfway mark looks reasonable and a gap-up start is likely.

This analyst feels Nifty could hit 11,700 by May 23. But whether such a level will sustain will depend on whether the BJP on its own comes to power.

Oza said a lot of institutional money is waiting on the sidelines should come back to the market now. HNIs and ultra-HNIs may take high exposure to equities by May 23, he said.

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“As per exit polls, NDA should easily cross the halfway mark. This is what the market has discounted to a certain extent. The market would have received a rude shock, if the NDA was to fall short of majority. It would have forced the BJP to reach out to other parties, which could have complicated the matter. The market should cheer and any downside should be limited,” said Ajay Bodke of Prabhudas Lilladher.

Nirmal Jain, Founder & Chairman, IIFL Group, said the market will heave a sigh of relief. “ Let’s look forward to reforms continuing and economy getting stronger,” Jain tweeted.

Joseph Thomas, Head Research of Emkay Wealth Management, said exit polls broadly indicate the return of the current dispensation for another term. This may be good from the continuity perspective as far as basic social and economic policies are concerned, Thomas said.

There may not be a euphoria, as a BJP win is in the price, said Umesh Mehta, Head of Research, Samco Securities, who feels that a gap-up tomorrow may not promise a strong close. That said, Mehta also sees 11,700 a reachable target.

“Nifty at max may trade in a 300-points range on the upside. The index should oscillate between 11,700 and 10,800. For traders, any rise could be a opportunity. Global factors will overrule once the coming week is over. It will now be Union budget which will hold the key for the market,” Mehta said.

Mehta said in last 3 years, 30 countries have gone to poll, at max the poll days have seen 2.9 per cent move, minimum just 0.1 per cent.

That said, history suggests exit polls are notorious and, thus, one must take them with a pinch of salt.

In last three elections, exit poll results were not-so-accurate. In 2004, exit polls wrongly forecasted BJP-led NDA coalition winning again, while in 2009, they meaningfully underestimated Congress-led UPA's seat share, said foreign brokerage UBS in a note.

“In 2014, while exit polls correctly predicted a BJP-led NDA victory, they significantly underestimated the margin of victory,” UBS said.

The market is likely to see one of its most volatile days in the coming week, said Milan Vaishnav of Vadodara-based Gemstone Equity Research & Advisory Services.

On Friday, the BSE Sensex climbed 537.29 points, or 1.44 per cent, to 37,930.77, while the NSE barometer zipped passed 11,400-mark.

“The exit results are better than expectations. Market will move up 2-3 per cent in the next few days. Investors should increase equity allocations,” said Motilal Oswal, CMD of MOFSL.
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