BJP or No BJP: Karnataka Election Results and Stock Market Reaction Analyzed

BSE SENSEX & NIFTY 50 both ended flat today as the S&P BSE Sensex fell 12.77 points at 35,543.94 and the Nifty 50 index fell 4.75 points at 10,801.85. However, the intraday volatility was high as Ii the early morning, as the Karnataka election results started coming up, Bharatiya Janata Party (BJP) was leading therefore, the market was very strong in the anticipation of BJP forming government. However, all the intra day gains were erased after Bhartiya Janata Party’s lead fell short of halfway mark as per the ongoing trends in Karnataka election results.

The stocks like Hindustan Unilever, Magma Fincorp, Nestle India, Kotak Mahindra Bank, JSW Steel and Pidilite Industries had hit their respective new highs on the BSE.

Karnataka Election Results

The Karnataka Assembly elections were held on Saturday, 12 May 2018. In the election the polling was held in 222 constituencies out of the 224-member assembly.

At 19:24 IST as per ECI data, the results showed BJP winning 104 seats, Indian National Congress winning 78 seats and Janata Dal (Secular) winning 38 seats.

Effect on Stock Market

The market breadth was weak as on BSE 1027 shares gained, 1612 shares declined and a total of 140 shares remained unchanged.  The S&P BSE Mid-Cap index fell approximately 0.81% and the S&P BSE Small-Cap index declined by 0.65%. Both of these indices underperformed the Sensex.

Further, among the sectoral indices, Realty, Industrials, Auto, Telecom, Energy, Healthcare, Utilities, Oil & Gas, Capital Goods, FMCG, Consumer Discretionary Goods & Services, Finance, Power, Basic Materials and Bankex, fell and underperformed the Sensex. However, Metal, Teck and IT indices outperformed the Sensex.

Midnight Reallocation of portfolios

As per advise with Prime Minister, the President of India has directed reallocation of portfolios amongst the members of the Union Council of Ministers. The portfolios of Minister of Finance and Minister of Corporate Affairs held by Arun Jaitley, is temporarily assigned to Piyush Goyal, in addition to his existing portfolios. Rajyavardhan Singh Rathore will now be the Minister of State in the Ministry of Information and Broadcasting.

S.S. Ahluwalia, Minister of State is relieved of the charge of Ministry of Drinking Water & Sanitation and assigned the portfolio of Ministry of State in the Ministry of Electronics & Information Technology. Alphons Kannanthanam, Minister of State leave the post of Minister of State in the Ministry of Electronics & Information Technology.

Stock Market this week

There is no pre formed coalition, single largest party is BJP and therefore BJP will most likely get the first opportunity to form government. Both BJP and JDS’s CM candidates have met the Governor to claim the majority. Therefore, similar to the reaction on Gujarat poll results if BJP succeeds in proving the majority, the market may climb again tomorrow.

Further, there are number of global factors like rising interest rates in the US, geopolitical situation in Iran, crude oil prices and the upcoming US- North Korea meet.