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What If It’s Not ‘400 Paar’ After Election Results? How Would the Market React?

The NSE benchmark Nifty 50 index has experienced a slump of around 3% from its recent peak of 23,111. This decline has been marked by consecutive losses in recent days, leading the index to slip below its 20-day moving average (DMA).

Reasons Behind the Market Correction

One major factor contributing to this correction is the uncertainty surrounding the upcoming elections scheduled for June 4. High levels of uncertainty typically make market participants nervous, leading to increased volatility. This has been reflected in the India VIX, which has surged over 100% from its lows and is now trading near the 24-mark.

Market Sentiment and Political Jitters

The confidence of the bulls has taken a hit due to fears that a narrow victory margin for the ruling Bharatiya Janata Party (BJP) could hinder the government from implementing bold reforms. In essence, anxiety is prevalent on Dalal Street as the trading environment is rife with known-unknowns and unknown-unknowns.

Election Outcomes and Nifty’s Performance Forecast

As we await the election results, let’s explore how the Nifty might perform based on the number of seats won by the NDA:

Below 270 Seats

  • Investor Reaction: Major sell-off expected.
  • Nifty Level: Could drop towards the psychological level of 20,000.

270-303 Seats

  • Investor Sentiment: Uninspiring.
  • Nifty Level: Likely to drift down to its 200 DMA at 21,050.

Read: How Well Do Markets Play Post Elections?

303-330 Seats

  • Market Dynamics: Initial volatility and choppiness.

Nifty: Downside protected with a return to normal business focusing on:

  • US PCE inflation guidance.
  • Timing of the first rate cut from the Federal Reserve.
  • Budget expectations and potential capital gains tax adjustments.

330-360 Seats

  • Market Reaction: Expect a surge towards the all-time high of 23,111.
  • Trading Theme: Bargain hunting and value buying with NDA possibly swearing in on June 9.

360-390 Seats

  • Market Reaction: Broad-based rally.
  • Nifty Level: Immediate targets at 23,500+, with a focus on Defence, Power, Infrastructure, Industrials, Capital Goods (CG), and PSU bank stocks.

Read: Navigating India’s Stock Markets in Election Volatility

390-420 Seats

  • Market Reaction: Nifty could rocket towards 24,000.
  • Trading Theme: Broad-based rally across sectors.

S&P’s Positive Outlook for India

Regardless of the election outcome, it’s important to note that S&P has revised India’s outlook to positive from stable.


The need of the hour is a cautious fiscal and monetary policy that reduces the government’s elevated debt and interest burden, while bolstering economic resilience and maintaining corporate profitability. All bullish eyes are on Tuesday, June 4, 2024.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions
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