The market was a bit stung by the setback for BJP in key northern states, and now, it will start pricing in a very different scenario for general elections 2019, said Udayan Mukherjee, Consulting Editor, CNBC-TV18 in a conversation with Santosh Nair, Editor, Moneycontrol.
He said it will be fair to assume that the market will go with a scenario where the BJP struggles to get 200 seats in the Lok Sabha, though it’s too early to say.
Having seen Gujarat election results, the three Hindi heartland states’ results on December 11, and some of the news which is coming out of Bihar and UP, it is not unfair to assume that BJP will struggle in the general elections, said Mukherjee adding the market is not comfortable with such a scenario.
Mukherjee, however, rules out a big fall for the market in the near term for three reasons. One, some amount of short-covering is expected; two, government will try to manage prices through LIC, etc; and three, a fiscal stimulus before election is expected.
He added, however, that in the medium term, there could be far bigger headwinds for the market.
RBI Governor’s resignation and ongoing global events are far more fundamentally damaging for the market at this point of time, Mukherjee said, adding politics is just noise. He said that till general elections, however, this noise will linger and create volatility and limit gains for the market.
Whether it is right or wrong is a different question but the market does not like a situation where we are presented with a coalition government in 2019, he added.
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