By Ruma Dubey
Today, India and the Indian stock markets are coloured in a deep hue of saffron. The decisive victory of BJP in Karnataka, where the people gave a clear majority mandate to the BJP bodes well for the 2019 elections. The market is naturally thrilled to bits as the more BJP wins, the more it expects political stability and continuity in the economic policies too.
The opening bell today saw all “Karnataka stocks” leading the gainers on the BSE. BEML, KIOCL and BF Utilities surged. BEML rose as much 9.5% as expectations are high that BEML’s stake sale by the government may get quicker approval and BF Utilities may get new projects if BJP wins in Karnataka.
There is no doubt now that the BJP is an election machine – it has 21 states of India now under its belt and that makes one wonder about how BJP wins almost every state. It learnt quickly from its mistakes in Bihar and once again in Karnataka, the Silicon Valley of India, it has come back with a resounding victory. Though somehow, we cannot help but urge the BJP to focus more on creating jobs with the single minded focus that it has on winning elections.
Sadly, the win for BJP in this tech-savvy state of India was more on account of caste – the Lingayat card played very well in the favour of BJP. That apart, the Modi magic obviously is still at work as the BJP workers were shouting chants of Modi more than Yeddyurapa. Or is it that Congress leadership failure is what worked in Modi’s favour? And yes, the sutradhaar of the election machine, Amit Shah can teach a lesson or two to the so-called well established political analysts too!
Unlike the UP and Gujarat elections, where the market was jittery; today, the stock market had no doubts that BJP will win and most expect profit booking to come in towards the end of the day.
Now that we have Karnataka out of the picture, the attention will be back on crude price, global cues and fear of a hike in interest rates. Today morning itself, the price of petrol and diesel were hiked by 17 paise and 21 paise respectively. The effect of the rising fuel prices is sure to be felt by India Inc and just as earnings are slowly but surely improving, this could have an impact in coming days on overall inflation. The market has ignored this news and also the news that Piyush Goyal is the new FM of India.
Despite the banking debacle, where RBI has had to ban Dena and Allahabad Bank from doing their basic business – of lending, the long term story, at least till now seems optimistic.
Earnings will once again hog all the limelight. Today, PNB will be in focus and sure, it will bleed and all eyes will be on its commentary on the Nirav Modi case. Lupin is another major company which will be in the news today.
In terms of macro data, the next BIG date is 31st May when GDP growth for Q1FY19 will be out but more significant would be 6th June, when RBI is expected to hold its MPC meet.
On the political front, assembly elections of Chhattisgarh, Madhya Pradesh and Rajasthan will be very closely watched.
So coming days have many cues – global, macro, political, monsoon but for today, the positive cue of the BJP win is what the day will be all about. Let us not extrapolate too much from this to 2019 outcome; let us just take this win for what it is today – that’s all. The market has moved on…..
PS: A nagging question – Yeddyurapa has won and will in all likelihood be sworn in as CM on 17th May. The Reddy brothers are also on the path to victory. What does that say about us, the people of India when it comes to tolerating corruption? Are our memories too short or in politics, corruption does not matter today? BJP won because Congress was corrupt so what does this victory say about BJP?