New Delhi: The Bharatiya Janata Party’s inability to secure a majority is expected to keep markets in a tight range in the near term, as experts indicate that the market has already priced in the election outcome. With the elections concluded, investor focus will now shift to the upcoming Budget and anticipated policy announcements, particularly the continuation of existing policies.
On June 4, the Nifty and Sensex both plummeted by 6 percent, reflecting market concerns over policy continuity due to the NDA coalition’s weaker mandate. Mid and small-cap indices performed even worse, each dropping between 6 and 7 percent.
Ajit Mishra, Senior Vice President of Research at Religare, suggested the market could undergo either a time correction or sector-specific price corrections. “The market may see a time correction, or price corrections in certain sectors,” Mishra explained. He identified key support levels, noting, “The 21,000-21,200 range should act as a support zone. A dip below this could trigger a price correction, potentially leading to a further decline of 1,000-1,500 points.” On the upside, Mishra indicated a potential recovery could push the Nifty towards the 23,400-23,500 range, which he believes will serve as a significant resistance level.
Kranti Bathini, Director of Equity Strategy at WealthMills Securities, also expects a period of market consolidation. “Market sentiment has turned negative with the NDA failing to secure a lead above 300 seats,” Bathini remarked. He anticipates the index to stabilize between 22,000 and 23,000 points until the Budget is announced. According to Bathini, market direction will hinge on signs of policy continuity and the Budget’s impact on investor sentiment.
Veteran market expert Ambareesh Baliga offered a cautious outlook, predicting the market will drift with intermittent gains and losses. “We won’t see a straight decline; there might be some upward movements once the government is formed,” Baliga stated. He expects the market to experience minor declines regularly rather than a significant fall, with the upside limited to approximately 500 points above the current levels until the Budget is released.
In summary, while the election outcome has led to immediate market volatility, investors are now looking towards the Budget and policy signals to determine the market’s future trajectory.
