Post-Karnataka polls, Sensex and Nifty tumbled a few points as Bhartiya Janta Party (BJP) fell short of taking 113 seats. The rivalling Indian National Congress (INC) managed to grab only 78 seats. As a result, the Sensex shot up 436 points and Nifty surpassed the 10,900 mark. The value of the Indian Rupee also showed a peculiar change since January 2017, dropping below the 68 Rupee-mark and then closing at 68.07.
Many do not understand the relationship between politics and stock markets. The influential factor for both of these is the sentiments of the stakeholders. Both are in the same continuum due to this fact.
Different political parties have different political, economic, and financial agendas. The political party whose agendas resonate well with the stakeholders are rooted for more in the stock market. Due to BJP’s liberal financial views and recent schemes that they have introduced, stakeholders seem to favour them. Furthermore, they do not wish to see the government change, which could bring about a complete reversal of the current financial and economic policies.
All the factors mentioned above spike the market volatility and ambiguity. When it is unclear who will win, the market becomes slightly unstable. Because of the election’s uncertainty, Sensex and Nifty closed a little lower than their peak, at 35,543 and 10,801 respectively.
The market is a culmination of independent sentiments of different stakeholders. Hence different companies are affected differently. Tata Motors, headed by Guenter Butschek lost 4.29 percent. Tata Steel, under TV Narendran, gained 2.29 percent. Similarly, Rajesh Adani’s Adani Ports made 0.23 percent growth.
Other gainers include PowerGrid with 2.27 percent boost, TCS with 1.33 percent increase, and HDFC Bank made 0.85 percent growth.
There is more to be seen as the Congress, with 78 seats made an alliance with Janata Dal (Secular), (JDS) who hold 38 seats. Both of the major parties are locked heads-on to form the government.
HD Kumaraswamy, the Karnataka state president of JDS said, “We have submitted the necessary documents which show that we have the numbers required to form the government. The Governor of Karnataka promised that he will consider the matter according to the Constitution.”
Until a stable government is formed, the market will experience more turbulence. Investors are advised to not change their investment decisions due to the market volatility. Keep yourself invested and do not try to predict the market movement.
