① According to exit polls, the Indian People's Party led by Modi will win this election with a huge advantage; ② Modi's re-election possibilities have inspired the capital markets greatly. On Monday, the Indian stock market hit a record high, fully showing the international investors' expectations for the Indian election results.
According to the exit poll conducted last weekend, the ruling coalition led by Indian Prime Minister Modi will hold as many as two-thirds of the seats in the House of Representatives, an absolute majority that is enough to initiate amendments to the constitution, and Modi himself is expected to win a third term as prime minister.
Encouraged by the continued friendly economic policies and business environment, investors have recently been increasing their investment in the Indian market. The Indian Nifty Index touched a historic high of 23,338.7 when it opened on Monday and closed up 3.25%.
According to Ajit Mishra, Senior Vice President of Research at Religare Broking, the market is expected to experience significant volatility while waiting for the official results of the Indian elections. If the Nifty can close at 23,400 points on a certain day, the index may be able to break through the historical level of 24,000.
According to Vikram Kasat, consulting director of Prabhudas Lilladher, every downturn in the Indian stock market is seen as a buying opportunity. June is a decisive month for the bull market, and people will take full advantage of this opportunity.
Bull Market in June
Kasat pointed out that last month he emphasized the need to buy low, and this month his investment logic has become to follow the trend.
Last year, foreign investors invested a net amount of $20.7 billion in the Indian stock market, but most of them withdrew before the general election this year. The election result may be a reason for them to buy again.
Modi's re-election means that India's open economic policies will continue. Last week's data showed that under the Indian government's push for infrastructure and real estate, the Indian economy grew by 8% in the fiscal year ending in March 2024.
Analysts pointed out that if Modi wins a big victory in the election, he will have more political capital to push for land and labor reforms, thereby promoting India's economic prosperity.
This will also drive overseas funds bullish on India. Vinod Nair, Research Head of Geojit Financial Services, said that with the massive inflow of funds that have been in a wait-and-see state for the past three months, the Indian stock market is expected to continue its overall rise.
However, some analysts have pointed out that the overall valuation of the Indian market may suppress the rise. Analysts at Kotak Institutional Securities believe that there is very little room for the market to rise, and most industries and stocks are overvalued.
They added that the big victory of the Indian People's Party may make the bubbles in some industries, such as automobiles, manufacturing, and the public sector, even bigger and more lasting.