UP Election Result Impact on Markets: At a time when crude oil is at a multi-year high, the Uttar Pradesh State Elections may bring in further volatility to the D-Street in the short term. Uttar Pradesh election result will be announced today, 10th March, which can work as major short-term sentiment for the market investors as it would indicate the public sentiment of the largest political state towards the ruling party at both center and state.
Also Read: LIVE | Uttar Pradesh Election Results 2022: Term 2 for CM Yogi? Counting of Votes Begins with Leaders at Temples, Tight Vigil in Key Areas
Roop Bhootra – CEO, Investment Services, Anand Rathi Shares and Stock Brokers, said: “Out of five states, markets are primarily eying the UP results and how does the incumbent government perform in terms of seats won. Currently, markets are expecting the incumbent government to come back to power with a majority.”
More Volatility on Cards?
Narendra Solanki, head- Equity Research (Fundamental), Anand Rathi Shares & Stock Brokers, said: “With results of state election getting announced tomorrow the markets are also likely to react to the outcome of the results and could see some volatility as the counting progresses during the day. With UP being the most important out of five states the markets could be eying the outcome of UP elections and its impact on national discourse.”
What Will a Return of the Incumbent Government Mean for the Street?
The two-day bull run that the investors are cheering currently may swing either way due to today’s UP assembly election outcome. Nishit Master, Portfolio Manager, Axis Securities, said: “In case BJP does not come to power in UP, markets will assume 2024 Lok Sabha election results could throw surprises, and create uncertainty in the minds of investors. However, we think the reaction will be restricted for a few days.”
However, if the incumbent government is unable to retain power in the state that could have a knee-jerk reaction amongst investors. Parth Nyati, Founder, Tradingo, said: “If BJP doesn’t come in UP then we will see a knee-jerk reaction in the market towards the 15,500 level but after then the direction of the market will depend on the global situation.”
Market experts think that currently, the market is more concerned about the skyrocketing crude oil prices. Nyati stated that “the UP election is considered important from the market perspective as it is a major state to define the political situation and it could have caused a major swing in the market if there was no big global event.”
The bigger impact of the election outcome will be seen in the form of a hike in fuel prices. Till now the government has been keeping the fuel rates steady for over four months in the run-up to assembly elections in five states, including Uttar Pradesh. Earlier, there were reports that an imminent increase in petrol and diesel prices has been put on wait-and-watch mode for more clarity on global oil prices.
The market, meanwhile, is also concerned over the Fed policy meet, which is scheduled for next week.
This is being reflected in India VIX, a measure of the market’s expectation of volatility over the near term, which is ruling in the 29-30 range for the last one week. The index was ruling at 20.6 level in the middle of February and 16.45 level at the beginning of the year.
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