The election was euphoria yesterday as the Bharatiya Janata Party won the election in three of the five states. The S&P BSE Sensex sprinted 1,595 points intra-day while the Nifty climbed over 400 points. The strode was ahead of the Samajwadi Party in Uttar Pradesh while the Aam Aadmi Party won a landslide victory in Punjab. The elections held last month in Uttarakhand, Manipur and Goa. The election results were for assembly polls, but this assumed significance as these are seen as a pointer to general elections, which are two years away. State polls are slated to be semi-final before the general elections of 2024, which has an impact on economic reforms and visibility of Modi-led government beyond 2024. Amnish Aggarwal, head of research at Prabhudas Lilladher Pvt Ltd says that the UP included and a state from the Northeast makes it very important. A good omen for investors from a medium-term perspective, as majority states have shown their acceptance to work done by the ruling party, according to analysts. Another interesting sub-trend is the emergence of a new creditable alternative to the existing parties on the national stage with pro-populist policies around management efficiency. The focus on efficient governance is a good long-term indicator for investments in India, according to analysts. The election euphoria may not last for long as potential macro shocks weigh on sentiment, according to Devarsh Vakil of HDFC Securities. The market's fag-end trade yesterday confirmed Vakil's fears.
The benchmark indices failed to hold onto their gains as global cues remained fluid. The day's high was 55,464 and slipped nearly 800 points from the day s high to end at 55,464. It also cooled off around 160 points from the intra-day high to end at 16,595. Given global headwinds including simmering Russia-Ukraine tension and swinging commodity prices, analysts suggest investors exercise caution. Aishvarya Dadheech of Ambit Asset Management says investors need to be vigilant because the uncertainty of the geopolitical standoff still looms large. Commodity prices are not likely to see a secular downturn even after war subsides, because sanctions will continue to disrupt the global supply chain. Unless sanctions are withdrawn, the global can remain volatile in the coming months and India will not be insulated. Commodity prices, Ukraine war, European Central Bank s interest rate decision and inflation and jobs data for the US will continue to influence global cues on Friday.