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Opinion: The State Assembly Elections 2018

Equitypandit_Election

Today marks the last day for the assembly elections 2018, as the states of Rajasthan and Telangana goes into polling. Rajasthan which consists of 199 constituencies and Telangana which houses 119 constituencies are up for electing their state Legislatures. A few days earlier, the states of Madhya Pradesh, Chhattisgarh and Mizoram also appeared for polling and the election results for these states will be declared on December 11.

The conclusion of the polling, which is set to be at 5 PM today, will enable the media houses to publish their exit polls for the states that went for elections. The most recent opinion polls that were published before elections, showcased a loss in the state of Rajasthan and a tough fight in the states of Madhya Pradesh and Chattisgarh for incumbent BJP. In Telangana, the ruling party TRS is more likely to hold onto its power whereas a hung assembly could be the most likely outcome in Mizoram, as per the major opinions polls.

Which States To Watch Closely?

Out of the five states that went in for elections, the outcome for the states of Madhya Pradesh and Rajasthan would be closely watched by the market. The anticipation around the results of Madhya Pradesh and Rajasthan is majorly due to the linkage between the ongoing state elections and the upcoming General Election in 2019. Rajasthan and Madhya Pradesh solely consists of about 10% of the total Lok Sabha seats in India and hence will play a major role for the current government who wishes to stay in power.

How Will The Results Impact The Market?

At present, the assumption in the market is that BJP will win in Madhya Pradesh for sure, however, the chances for BJP to come back in power in the state of Rajasthan are very thin. In Equitypandit’s view, if BJP loses both Madhya Pradesh and Rajasthan, it would be a major shock for the market. In that case, NIFTY may go down to 10200 levels. But if BJP loses only in Rajasthan, it would not have a much adverse effect on the market. Nifty at the most may go to 10500 zones and will bounce back from that level.

Overall the technical set up of the market is still bullish, in long-term. The worst-case scenario, which we have mentioned above, may create panic in the market and can drag nifty to sub 10200 levels. Apart from this, the market would remain in a consolidation range only. Nifty to stays between 10500-10900 levels in present expiry.

Read EquityPandit’s Technical Analysis Of Indian Stock Market