The Ballot Bullet

Stock market investors needn’t panic at the BJP’s setback in the Karnataka polls; but they shouldn't be too complacent either and take 2024 as a done deal

- UDAYAN MUKHERJEE

WHILE STOCKS seem to have shrugged off, correctly, the setback for the BJP in the recent Karnataka polls, it brought again to the fore the question of whether elections could still emerge as a potential risk for markets in 2024. This is significant because it is a raft of global factors that top the list of worries for most investors and market participants in India. Rising US interest rates, bank collapses, geopolitics and recession are among other issues that could act as speed breakers to the India growth story. As far as the domestic picture goes, investors seem pretty relaxed—decent growth, recovering capex, stable macro and steady earnings growth with only minor irritants, like El Niño or some slowdown linked to global causes, clouding an otherwise sunny outlook. But what of elections next year? Should one take the outcome for granted or could there be a surprise?

It is no secret that the stock market’s preference, by far, is the current government at the centre. This is hardly a surprise, the stock market being the ultimate capitalist institution, and capitalist institutions worldwide lean rightward. So much so that the mere whiff of Left-leaning economic policies, of which the Congress party and many of its allies are assumed to be proponents, gets market participants all flustered. The fact that a majority of stockbrokers and market intermediaries hail from Gujarat or Rajasthan—traditional Right-wing bastions—may also be a contributing factor. Thus, politically speaking, it has been a comfortable decade for the Indian stock market, the odd policy hiccup such as demonetisation notwithstanding.