BJP manifesto 2024 promises policy continuity. What does it mean for the Indian stock market?

Even though general elections are strong triggers for the stock market due to the element of uncertainty they introduce, the market this time looks unusually calm about the impending elections, expecting policy continuity and political stability after the elections.

This expectation seems to have grown stronger after Prime Minister Narendra Modi unveiled the BJP Manifesto "Sankalp Patra", on Sunday, April 14 which highlighted the party's focus on the continuity of its ongoing policies and reforms.

Also Read: BJP Manifesto 2024 Highlights: BJP releases ‘Sankalp Patra’, CM Siddaramaiah says BJP made 600 promises but…

As the BJP manifesto emphasises stability, continuity, and reforms, significant reform measures are anticipated post-election. Experts say the first 100 days of the government will be key monitorable. They also point out that the party has avoided meaningful freebies and kept its focus on enhancing manufacturing, particularly in the MSME sector, to spur employment, increase rural incomes, and promote exports. Also, the focus has been laid on improving national infrastructure, including defence, railways, aviation, electricity, renewables, and housing.

Also Read: BJP Manifesto Lok Sabha polls 2024: Tata Motors, Dabur, Bajaj Finance among stocks that can benefit

What does it mean for the Indian stock market?

Experts are of the view that the BJP's manifesto is pro-growth and will have a positive impact on the domestic stock market in the short term.

"The anticipated impact on the stock market sentiment is positive in the short term, with expectations of a strong budget post-BJP's electoral victory. However, there might be a temporary correction following the event before the market stabilizes. Nonetheless, long-term prospects remain optimistic," said Arpit Jain, Joint MD, Arihant Capital.

Jain believes autos, cement, financials, consumption, manufacturing and capital goods sectors are poised to benefit, along with potential rallies in PSUs.

"Overall, the post-election landscape suggests a proactive approach towards economic growth and development," said Jain.

BJP's manifesto may be a positive factor for the market but the key will be the execution of these promises. Also, the upcoming Budget after the new government is formed, will be in focus of the market.

"Further market movement will be influenced by the Budget proposals. It is quite likely that the Budget will turn out to be 'transformational' as the prime minister said recently. The new government will be in a position to continue with the infrastructure push of the last few years," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Vijayakumar underscored that the high GDP growth of 7 per cent and low inflation of around 4.5 per cent expected in FY 25 can provide the government with tax buoyancy to implement infrastructure spending with fiscal prudence. Importantly the RBI too can chip in by cutting rates. This scenario augurs well for the stock market.

Overall, the policy continuity indicated in the manifesto will bring in greater clarity, scale and confidence among the business community and investors.

Deepak Jasani, Head of Retail Research at HDFC Securities expects greater aggression in execution and new reform measures from the new government.

"Although the results of these measures may time to fructify, the markets tend to discount the triggers in advance. The GDP and in turn corporate profitability may grow at a faster pace and the valuations also may nudge up a bit reflecting greater visibility of sales and profitability growth," said Jasani.

While the majority of experts are positive about the market's prospects, there may not be a sharp uptick in the market if the BJP returns to power, as the possibility of it looks already fairly discounted.

The market has already factored in Modi's return after the elections, as evidenced by the surge in the Sensex in December following the state election results. These results saw the BJP retaining power in Madhya Pradesh and wresting Rajasthan and Chhattisgarh from the opposition.

Read all market-related news here

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.