INSUBCONTINENT EXCLUSIVE:
NEW DELHI: BS Yeddyurappa-led BJP's failure to prove majority on the floor of Karnataka assembly on Saturday is all set to trigger a
kneejerk reaction on Dalal Street when trade resumes on Monday
Analysts said the market is going to open with a downward gap but should recover the same day.
Yeddyurappa, who took oath as Karnataka
Chief Minister, resigned on Thursday, skipping the trust vote
The outcome is being seen as a big setback for the BJP.
The Supreme Court had on Friday ordered advancing of a scheduled test of majority
for the new government, modifying Karnataka Governor Vajubhai Vala's earlier order allowing the party 15 days to prove majority.
"The market
might already have discounted the event as we saw a breach of 10,600 on the Nifty50 on Friday
We may see a small gap-down opening, which will be equally bought into after the first hour of opening session," said Sanjiv Bhasin,
EVP-Markets Corp Affairs, at IIFL.
It's just a political setback
It may not have any major implication for the market, said G Chokkalingam, founder and CEO, Equinomics Research Advisory.
"What matters to
the market is whether the ruling government will come back to power in 2019
To that extent, BJP has already doubled its seats in Karnataka
The outcome will have only a knee-jerk reaction," Chokkalingam said
BJP had won 104 seats in the recently concluded Karnataka elections
Ajay Bodke, CEO and Chief Portfolio Manager PMS at Prabhudas Lilladher noted that the market is more concerned over the adverse fallout of
surging global crude oil prices on India's macroeconomic fundamentals and slow take-off in corporate earnings
The sharp correction that is under way may gather momentum, he said.
The Sensex lost 687.49 points, or 1.93 per cent for the week to settle
NSE barometer Nifty50 dropped 210.10 points, or 1.94 per cent, during the week to close at 10,596.40, thanks to deteriorating macro cues and
political uncertainty.
While INC and JD(S) formed alliance soon after the election outcome, it was BJP which was first invited by Governor
INC and JD(S) which together won 116 seats in the state elections cried foul and approached the SC to stop Yeddyurappa taking oath as Chief
minister but the apex court refused to stay the swearing-in ceremony.
Later a three-judge bench headed by Justice AK Sikri ordered floor
boasts of a literacy rate in excess of 75 per cent
birthplace for a large number of startups
The state holds 28 seats in Lok Sabha and 12 in Rajya Sabha
"Swinging political fortunes in the Karnataka elections, being the most watched out event of the year, popular media opinions and
perceptions were so heated that to the common man the election outcome would have felt like a make-or-break event," said Jimeet Modi, CEO
Founder, Samco Securities.
"Mr Market is far more mature and is really not bothered about the outcome of the state elections, save the
short-lived kneejerk reactions," he said.
Bodke advised investors to stick to companies with stable, steady and visible earnings growth in
sectors such as retail-focused private banks, FMCG, retail and automobiles.
"Investors need to tread with caution in sectors such as
aviation, logistics, OMCs and tyres," he said.
Volatility is likely to remain high amid negative global cues and FII selloff but it should
be used to add stocks that are expecting faster earnings recovery and hope to benefit from government spending, rural spending and
expectation of strong near-term demand has propelled many mid-cap IT companies to new highs their valuations appear stretched
Headwinds in pharma sector would continue to cap the upside
Corporate focused banks would continue to reel under high provisioning requirements for atleast 2 more quarters and are best avoided," Bodke
