India Lok Sabha Elections 2024- Negative Electoral Results Would Lead To Valuation Correction: HDFC Securities

HDFC Securities Institutional Equities

Contrary to all exit poll projections, the BJP did not secure a clear majority in the Lok Sabha in the General Elections of 2024, which came as a negative surprise.

This outcome implies that coalition politics have returned after a ten-year gap, alarming the equity markets and causing frontline indices to correct by 5-8% today. This needs to be considered in light of year-to-date performances, though, as most index returns in CY24 are still positive following a strong CY23.

Further, sharper corrections were observed in domestic cyclicals. This was more pronounced in the recent outperformers, which were the industrial, PSU, power, and real estate sectors. In comparison to other sectors, defensive sectors like IT, pharmaceuticals, and staples fared relatively better, given the risk-off.

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