The Indian stock market is expected to see profit-booking after the Lok Sabha elections, according to brokerage firm Bernstein. The firm’s analysts, Venugopal Garre and Nikhil Arela, noted in a report that the high expectations for the BJP coalition to win over 400 seats could lead to a short-term negative reaction in the market. However, they believe that a profit-booking post-elections is coming anyway, and the election results will only serve as a trigger point for the inevitable.
The analysts said that eventually, the macro story will take over and that as it stays healthy, there could be expected modest downsides while manufacturing and capex stories will remain a key theme. They noted that polls project as high as 411 seats for the ruling National Democratic Alliance (NDA).
The analysts also said that a correction is inevitable, and markets that are simply looking for a reason to fall may overreact to a sentiment that may not mean much rationally. They said that even if the BJP coalition wins 300 seats, which is still an absolute majority, it will be seen as a “below consensus” result, and a reaction cannot be denied.
They added that this could eventually start the end of the current market frenzy that has lasted for a full year.
