The celebration of the world’s largest democracy is in its last stage for the year. The final phase of polling took place on 19th May 2019. Around 90 crore adult population was eligible to choose their representative in the lower house of the parliament this year. This marks a rise of 10 percent from the last Lok Sabha elections in 2014.
For the biggest festival of Indian democracy, around a million polling booths were installed. The elections saw an impressive 66.39 percent turn out overall.
The political aspirants have been trying to woo the Indian public with pictures of a promising future through elections campaigning. The seven phases of hectic poll schedule are over, exit polls are out. Most exit polls indicate towards a clear majority for Modi- led NDA.
Out of the 543 Lok Sabha seats, Modi led BJP- NDA alliance is predicted to win above 300 seats. The polls also indicate towards a clean sweep victory by the Modi- government in several key states including Maharashtra, Madhya Pradesh, Bihar, Odisha, and West Bengal.
Are Exit Polls Reliable?
Looking back at the past, exit polls have correctly predicted many recent elections results. However, there have been times when they have failed terribly. It is a data-based prediction which is not an exact science. The exits polls are not completely reliable. They are not completely insignificant either.
Positive Rally After Exit Polls
Though the Indian market was rooting for BJP-NDA to form the government again, it was expecting BJP led -NDA government to get a very thin majority to form a government. The exit polls predicted a clear majority for the incumbent government. It was a big surprise for the market and on the next trading session, we saw a positive 4% rally in the market.
How will the market perform?
Whether these exit polls are correct or not is a matter of debate until 23rd May 2019, when the final results of the elections are due. But for now, the market is now on the higher side of the trading range. Today Banknifty future made a high of 30965 which is a triple top for the market as, before that, banknifty almost touched that level twice. So if banknifty future crosses the level of 31000 marks and sustains for one hour then we can see a huge rally in the market and target of 33000-33200 would be seen in the coming month.
Similarly for nifty also, if Nifty spot closes above 11900 on daily charts, then the level of 12500 would be seen on nifty.
The Indian market is again on make or break level. However, there is a word of caution. If on 23rd May 2019 results are not on par with the exit polls ie if its lower than what exit polls show then the market would see a correction till 11550-11100 levels. After that market will watch what the economic agenda of the next government would be. The market will also watch closely where world markets are heading. So we believe that the market is trading at a very crucial resistance level. And it has priced in the exit poll results too. So actual results must not disappoint the market.
Whether the exit polls are accurate or not you need the right strategy to get over this phase profitably. Below are the strategy for playing and winning the election wave:
Traders who have long Positions
Traders who have a long position in the market should hold their long positions. The stop-loss for them would be 11700 on nifty spot level. Those who don’t have any position should buy banknifty future only above 30990 with a stop loss of 30500 and medium-term position target of 31800,33000.
Short Term Investors
The short term investor should stay away from the market till 23rd May and should enter only after 23rd after accessing the results. The sector to focus would be a good quality PSU and cement sector.
Long term investors
For Long term investors, an election is just a one-month event. So they should not wait for any election results and keep accumulating stocks at every dip. We firmly believe that 11000-11100 is a bottom for the market and they should access their investment only if nifty breaks and closes below those levels.
