4 sectors that can be beta plays with more premiumisation opportunities: Harsh Gupta Madhusudan, NSE Gift City

In the last one week or so, the narrative on the Street which was making a lot of people nervous was that the BJP was going to get 270-280 seats maximum and low voter turnout was being seen as an indicator that probably the wave is missing. That seemed to be getting reversed now. What is your thought on the market’s way of analysing voting patterns?
Harsh Gupta Madhusudan: George Soros mentioned reflexivity. There are reasons which lead to some numbers in the markets, which lead to narratives ex post facto rationalisations. So, what happened was the external backdrop in terms of FII money has not been very positive of late because the Fed higher for a bit longer has turned out to be true. Along with that, DII money was acting as a counterweight. But once some profit booking happened, then suddenly this narrative took on a life of its own. And I think it was just a matter of forming a bottom, which we kind of seemed to have formed in the last two-three days, where a trailing Nifty-50 PE ratio of 21 seems to be the bottom for the market.

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Offering CollegeCourseWebsiteIIM LucknowChief Executive Officer ProgrammeVisitIndian School of BusinessISB Chief Technology OfficerVisitIndian School of BusinessISB Chief Digital OfficerVisitIn terms of voting turnouts, yes, it is around two-three percentage points lower than 2019 as we speak, but that could go against the opposition as well. So, it is difficult to extrapolate the election results just from the voting percentage. Even if the opinion polls before the election started turn out to be slightly on the optimistic side, it would seem within the realm of possibility that Mr Modi’s BJP gets a simple majority. Now, let us say it is 275 instead of 315 or 280 instead of 320, what really changes? So, I do not think it was so much a political risk as it was in the market with DIIs removing their hands while FII was already removing it and then an ex post facto rationalisation on the election chances led to a bit more panic.

If the ruling dispensation comes back with a strong majority, how would the market read that? If they come back with a relatively lower majority, but the captain remains the same, how would the market read it? Also the impact on the reform trajectory because the Street loves Mr Modi and the entire cabinet because of the outstanding work done in many areas.
Harsh Gupta Madhusudan: What really matters is a Lok Sabha majority and a Rajya Sabha majority. The BJP obviously was not close to Rajya Sabha majority. It has been slowly building up close to that in terms of the NDA or NDA plus because that obviously depends on state election results as well. So, as long as they get close to Rajya Sabha majority and maintain a Lok Sabha majority, I do not think the reform process or momentum changes much.