Elections Result, RBI Interest Rate Decision To Impact Market Sentiments In The Week

The experts anticipate a rally in the key equity benchmark indices based on the exit polls’ prediction of a major win for the Bharatiya Janata Party-led NDA and robust GDP data

After the election results, the RBI is set to reveal its monetary policy ahead on June 4, 2024

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The results of the Lok Sabha elections and the Reserve Bank of India (RBI)’s interest rate decision would impact investor sentiments in the week, analysts noted. The experts anticipate a rally in the key equity benchmark indices based on the exit polls’ prediction of a major win for the Bharatiya Janata Party-led NDA and robust GDP data.

Elaborating on the market outlook, Santosh Meena, Head of Research, Swastika Investmart Ltd, noted, “Exit polls on Saturday predicted that Prime Minister Narendra Modi will retain power for a third straight term, with the NDA expected to win a big majority in the polls. Counting of votes will take place on June 4. All eyes are now on the most significant event of the past five years — the outcome of the Lok Sabha elections, scheduled for Tuesday. Before that, market participants will react to the exit polls on Monday. The market is approaching the event with caution, and the positive surprise from exit polls can lead to a rally as majority of the exit polls are giving 350+ seats to the NDA. Conversely, a negative surprise from actual results might trigger a knee-jerk reaction in the market.”

After the election results, the RBI is set to reveal its monetary policy ahead on June 4, 2024. Meena added that the behaviour of foreign investors would be keenly observed once the election results are announced. 

Globally, macroeconomic data from the US and China will also be released in the week. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “Manufacturing and services PMI data for May are scheduled to be announced during the week. Exit polls results, which indicate clear victory for the NDA with around 360 seats completely removes the so-called election jitters which have been weighing on markets in May. This comes as a shot in the arm for the bulls who will trigger a big rally in the market on Monday.”

Notably, the indices declined majorly last week. The BSE Sensex plunged 1,449 points or 1.92 per cent, while the NSE Nifty50 declined 426.4 points or 1.85 per cent.

Arvinder Singh Nanda, Senior VP, Master Capital Services, noted, “Historical trends from the previous two elections outcome in 2014 and 2019 have shown patterns, where the market closed with minimal changes after experiencing significant volatility during the early trading hours.”

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Research, commented that in addition to the exit polls, the markets would also react to domestic GDP data on Monday.