Indian stock markets are expected to remain largely unaffected by the Congress party’s win and the Bharatiya Janata Party’s defeat in the recently concluded Karnataka state elections, with the NSE Nifty 50 continuing uptrend, and stocks driven by global macros. While sentiment may take a hit, most of this outcome has already been factored in by investors, according to market experts.
Nifty 50, Bank Nifty technical levels to watch; check resistance, support, drivers
According to Santosh Meena, Head of Research at Swastika Investmart Ltd, while there is a possibility of some profit-taking, the Nifty is likely to maintain its upward trend, with key resistance levels at 18440 and potential gains towards the 18630-18690 range. The Bank Nifty is expected to see some profit booking around the resistance zone between 43900-44150, but a successful break above this zone could lead to the next resistance levels at 44444 and 45000.
“Karnataka elections would not have a significant impact on the Indian stock markets on Monday as we believe that most of the event was already priced-in when many exit polls showed a similar fate on Thursday evening,” said Manish Chowdhury, Head of Research, Stoxbox.
Another analyst said that while the Karnataka election results may have a sentimental impact on the Indian stock market, much of the impact has already been priced in. The market is more likely to be driven by global macroeconomic factors, such as inflation and the recovery of major Asian economies, in the coming months. The inflation in the western economies will have a greater impact on the Indian market than the Karnataka election, the analyst said.
Will IT sector see an impact from Karnataka election results?
“It would be too early to jump the bandwagon of a sectoral rotation based on just the outcome of one state election. We feel that any sectoral bet/view is primarily based on the industry dynamics, competitive intensity, growth outlook, regulatory environment, etc. rather than just the setting of the state politics. The IT sector would primarily take cues from the health of the US and European economy and would not read too much into the change in guard at the state level. With everyone cutting across different party lines aware of the importance of the IT sector for Karnataka as well as India, too many policy changes which would affect the attractiveness of the sector would be avoided at all costs,” said Manish Chowdhury, Head of Research, Stoxbox.
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Share market analysts watching these levels since even before Karnataka election results
Before the election results were announced, analysts were anticipating the direction of the market to be determined by fresh triggers for the next leg of the rally. Kunal Shah, a Senior Technical & Derivative Analyst at LKP Securities, suggested that the immediate resistance level for the Bank Nifty was at 44000. Mitul Shah, the Head of Research at Reliance Securities, stated that investors were awaiting the CPI data and the Karnataka assembly election result. Siddhartha Khemka, the Head of Retail Research at Motilal Oswal Financial Services Ltd, suggested that investors would continue to keep an eye on economic data to be released next week and that the structure of the market remained positive.
In terms of the election outcome itself, the Congress party won the election with a clear majority, while the BJP conceded defeat. The Congress party claimed that the results were a verdict against BJP leaders, including India’s Prime Minister Narendra Modi and Home Minister Amit Shah.