A consistent political environment has the potential to propel Nifty to levels between 20,600 and 20,900 in the future, as per market analysis.
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The BJP, led by Narendra Modi, won three out of four state elections in Madhya Pradesh, Rajasthan, and Chhattisgarh. This victory is expected to make the stock market happy as it reduces concerns about populist policies and political risks, according to Nuvama, Nomura, and Elara. With these wins, the BJP now governs 12 states.
While the risk of populism may decrease, analysts predict that freebies will still be a major focus leading up to the 2024 general elections. Despite worries about fiscal populism, the election results are seen positively by investors, anticipating reduced policy and political risks until 2024.
The BJP's strong performance is seen as providing political capital for infrastructure projects, potentially reducing the need for populist measures. However, analysts note that factors like earnings, liquidity, and interest rates will play a significant role in shaping the market outlook over the medium term.
Elara expects a GDP growth of 7 percent for FY24 and 6.5 percent for FY25, with a focus on rural and healthcare stocks due to targeted BJP schemes. Despite anticipated spending on free handouts, core inflation is expected to soften.
The NSE Nifty 50 reached an all-time high at 20,291.55 on December 1. Analysts, like Prashanth Tapse from Mehta Equities, believe a stable political environment could drive Nifty to levels between 20,500 and 20,900. Positive global trends and signs of foreign investors returning to domestic markets are seen as factors contributing to the upward movement.