Maharashtra election 2024 outcome not a major worry for markets: Analysts

The concerns that some investors may have is that a government led by MVA could perhaps give lower priority to some of the infrastructure projects

The outcome of Maharashtra state elections is unlikely to move markets much, said analysts.

The markets, they believe, have bigger developments to worry about in the short-to-medium term.

The state went to polls across 288 legislative seats on November 20, 2024 with the counting of votes scheduled for Saturday, November 23.

“Maharashtra elections should not have any major impact on the markets, which have been weak off late thanks to the relentless selling by foreign institutional investors (FIIs).

"We don’t expect any major correction, or reaction (either ways), on the result day irrespective of the verdict.

"Investors should use this opportunity to buy stocks of quality businesses,” said Manish Jain, chief investment officer at Centrum PMS.

That said, Maharashtra polls are likely to be keenly contested between the ruling MahaYuti alliance and the opposition, Maha Vikas Aghadi (MVA).

Considering that Maharashtra is the second largest state in terms of contribution of seats at the Centre, wrote analysts at Macquarie in a recent note, a favourable political outcome for the BJP-led Maha Yuti alliance assumes political importance for Narendra Modi to consolidate his power.

Policy announcements

Following the formation of a new administration, markets, analysts said, will closely keep a tab on policy announcements, if any, that may have an operational impact on Maharashtra-based firms.

“The concerns that some investors may have is that a government led by MVA could perhaps give lower priority to some of the infrastructure projects compared to MYA (BJP-led alliance).

"Hence, we think it becomes imperative to closely track some of the major projects that have been planned in the state and the implications for companies that are involved in executing those projects,” wrote Suresh Ganapathy, Aditya Suresh and Punit Bahlani of Macquarie in a recent note.

In the Lok Sabha, Maharashtra is the second-largest state with 48 seats.

It contributes the largest at 13-14 per cent to overall gross domestic product (GDP) in India, according to Macquarie's estimates, and has per capita income 30 per cent above the national average.

The state also has a 16 per cent share in total exports from India and has the highest share (19 per cent) in startups recognised by GOI at an all-India level, as per the foreign brokerage.

Market outlook

Although the elections in Maharashtra are a significant event for the stock market, market performance, analysts said, is not solely determined by them.

Additional elements, including the state of the world economy and geopolitics, company profits and investor sentiment are also very important.

"Market expansion can only be fueled by a clear mandate for any business-friendly government that will increase investor confidence and draw in investments," said Vishnu Kant Upadhyay, assistant vice-president for research and advisory at Master Capital Services.

With the September 2024 quarter (Q2-FY25) results season drawing to a close, markets' gaze, according to analysts, has shifted back to geopolitical developments, especially the Russia – Ukraine war.

That apart, they await President-elect Donald Trump's inauguration on January 20, 2025, which they believe will pave the way for his thoughts and policies being put into practice.

Technically, 23,650-23,700 remains a strong resistance for the Nifty, Osho Krishnan, senior analyst for technical & derivatives research at Angel One said, while 23,800-24,000 remains a hurdle for a trend reversal in the near-term.

“On the lower end, 23,400-23,350 is likely to serve as an intermediate support level.

"Should this be breached, there is a potential for further downward correction toward 23,200-23,100 levels,” he said.