Maharashtra Elections 2024: What lies ahead for the Indian stock market?

Much of the negative sentiment has already been priced into the equity market, and historically, state elections have had minimal long-term impact on stock performance, as the central government typically plays a more significant role in shaping market trends.

However, Maharashtra, being a key state, may trigger a short-term knee-jerk reaction in the markets, which is likely to be brief, believes Nikhil Ranka of Nuvama Asset Management.

Ranka believes that the elections are unlikely to have any lasting effect on the markets. He added that the market appears to be taking a cautious approach ahead of the election results, but if the outcome is favorable, he expects the market to resume its upward trajectory from Thursday onwards.

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On the flip side, Vishnu Kant Upadhyay of Master Capital Services suggested that the Maharashtra elections could significantly impact the stock market due to the state’s status as one of India’s most industrialized regions and its significant contribution to the nation’s GDP.

“A clear mandate for a business-friendly government could fuel market expansion by boosting investor confidence and attracting investments,” Upadhyay noted.

Following the formation of a new administration, investors are expected to closely monitor any policy announcements that could influence businesses.

Global brokerage firm Macquarie, in an earlier note, had stated that Maharashtra becomes an important state for the National Democratic Alliance (NDA) following the “unfavourable outcome” in the Lok Sabha elections.

The brokerage had outlined several reasons why both India and investors will be closely watching the Maharashtra election results:

– Maharashtra is the second-largest state in the Lok Sabha, with 48 seats.

– The state contributes 13–14% of India’s GDP—the largest share among states.

– Maharashtra’s per capita income is 30% higher than the national average.

– The state accounts for 16% of India’s total exports.

– It has the highest share (19%) of startups recognized by the Government of India.

– Maharashtra consistently ranks at the top in foreign direct investment (FDI) inflows in India.

The Indian stock market observed a holiday on November 20 for the Maharashtra Assembly elections.

Notably, equity benchmark indices staged a strong rebound ahead of the Maharashtra polls. The Nifty50 snapped its seven-day losing streak but closed off its intraday highs, rising 65 points to end at 23,519. The Sensex also closed in the green but fell nearly 900 points from its peak, following reports of a Ukrainian strike inside Russia.