India 50: Abki baar 400 or 200 paar? Nifty 26K or 18K paar?

·         If Nifty indeed crashed after the election result shows no Modi 3.0 this time, it may be also a wonderful opportunity to enter blue chips at a deep discount

India’s benchmark stock index, Nifty closed around 22502.00 on Saturday's special short trading session (18th May) ahead of the polling day holiday in Mumbai on Monday. Nifty surged almost +2.03% for the week amid short covering/value buying after falling to a multi-month low around 21821 on 13th May due to growing uncertainty about India’s election outcome and fading hopes of a clear Modi 3.0.

Initially, at a glance, a blockbuster return of incumbent PM Modi (BJP/NDA) with 400+ or even 300+ seats will be huge/moderately positive for the Indian market and Nifty may easily jump 10-20% in 1-2 days amid hopes & hypes of further ‘monumental’ or even ‘incremental’ policy reform. The Indian market was already discounted to some extent on hopes of a comfortable return of PM Modi and Nifty scaled a life time high around 22795 on 3rd May despite consistent selling by FPIs as DIIs (Indian PPT-plunge protection team) continues to absorb FPIs selling pressure. Any democratic government in the world, be it India or the US, never allows stock market panic during election time!

But India’s Nifty was also affected by growing election/political uncertainty since mid-Feb’24 amid no visible ‘Modi wave’ this time during election time, which was almost unthinkable till mid-February. At that time, especially after the ‘grand opening’ of ‘Ram Mandir’ (Temple) with a ‘southern touch’ in Ayodhya by PM Modi in late Jan’24, almost everyone in the market/political circle was almost sure about Modi 3.0 with a comfortable majority around 300+ seats at least for BJP alone and 350+ seats for NDA alliance, in line with previous 2019 election result, if not 370+ and 400+ seats as announced by PM Modi in the Parliament itself (‘Abki baar 400 paar’ for NDA and ‘abki baar 370 paar’ for BJP alone), which was more like a political narrative to pressurize opposition parties even before election started.

Indian Parliament (LS) has 543 seats in total and the halfway (50%) simple majority mark 273 seats, while the 2/3rd absolute majority mark is 365 seats, which is required along with the similar majority in the upper house of the Parliament (RS) by the ruling party for any monumental political reform initiative like change in Constitution, one nation one election, UCC (uniform civil code) etc without any political consensus/proper debate in the Parliament.

The opposition IND alliance led by INC (CONG) leader Rahul Gandhi successfully portrayed Modi’s election slogan “Abki baar 400 paar” as an attempt for ‘one nation, one leader’ in the country (electoral autocracy). Modi/BJP may have gone for the political slogan of ‘Abki baar 400 paar’ (this time 400+) as a part of a well-planned political/election strategy to force the INC/IND opposition alliance to play in the back foot from the beginning rather than front foot (play defensively rather than attacking).

But opposition INC/IND was also successful in creating a counter-political narrative about possible modification in India’s Constitution and the abolition of India’s age-old Caste Reservation system thereafter by the Modi 3.0 regime amid adverse/controversial comments on the politically sensitive subject by various top/middle level BJP and RSS (parent/cadre organization of BJP) leaders. This forced Modi-Shah/BJP onto the back foot after realizing some anti-Modi wave on the ground, especially among millions of poor Indians, having some OBC background.

 

Already there was no meaningful Modi wave this time due to 10 years of anti-incumbent waves amid growing unemployment/under-employment, especially for educated youths and incrementally higher cost of living (inflation). Most of the voters are worried about various economic issues amid widespread rural distress, lack of good employment opportunities, and elevated inflation.

Also, the lack of any nationalistic issue like the Pulwama-Balakot surgical strike on POK just ahead of the 2019 general election is now going against BJP/Modi. The election battle has now turned into Mandal/Mandir/Masjid/Mangalsutra; Democracy/electoral-quasi-autocracy; fastest economic growth/jobless economic growth; Fragile Five/First Five etc. There are issues of secularism, democracy/electoral autocracy/constitution, inclusive growth/redistribution of national wealth, caste census/universal social security, and even inheritance tax controversy.

As noted earlier, like the current IPL (India’s most popular T20 cricket tournament), India’s Political League (IPL-Election) is now in full swing and reached knock out stage after 4th phase of seven phase marathon election (festival of democracy) over almost 3-months. Now three more phases of polling are due in various states across India on 20th May, 25th May, and 1st June; official counting/result will be published by 4th June, but before that unofficial/media exit poll will be announced by various organizations on 1st June evening after the last phase of polling gets completed.

As per unofficial estimates by various experienced political journalists/analysts, psephologists surveying constantly on the ground (real-time) and also public reports by various social media platforms, the ruling incumbent Party BJP/Modi may have already lost around 60 seats (minimum) it got in the last election in 2019 after 4th phase of polling. Overall, India’s alternative social media comprising mostly experienced political journalists, having good relations with top brass of BJP/NDA and also INC/IND leaders/political workers on the ground is now projecting around 175-195 LS seats for BJP alone and 15-30 seats for BJP allies (pre-poll); i.e. total around 190-225 seats for NDA in the 2024 LS election against 358 (303+55) seats in 2019 election. This is in sharp contrast to current projections

After considering estimates by various social media platforms/experienced political journalists and also considering some other feedback, BJP may win around 192 LS seats (on the maximum side) this time in the 2024 election against 303 seats in the previous 2019 election. BJP allies (pre-poll) may win around 29 seats (on the maximum side) in the 2024 election against 55 seats in the 2019 general election. Thus BJP/NDA/Modi may win around 221 LS seats in the 2024 general election against 358 LS seats in 2019.

On the other side, India’s Cong party; i.e. INC led by Rahul Gandhi may win around 133 LS seats this time in the 2024 general election against 52 LS seats in the 2019 general election. And INC allies (IND) comprising mainly six major regional parties across 6-8 Indian states may get around 163 LS seats this time in the 2024 general election against 43 (UPA allies) in the 2019 general election. Thus INC/IND/Gandhi may win around 296 LS seats (with all known pre-poll alliances) this time in the 2024 general election against 221 LS seats by NDA, paving the way for an IND government led by PM Candidate Rahul Gandhi (?).

In the 2019, election, various non-BJP and non-Cong/INC regional parties won 95 LS seats as opposition parties were fragmented then. But now in 2024, various regional political parties (mostly center-left) have united to form IND (INDIA- Indian National Developmental Inclusive Alliance) alliance just months before the election to fight PM Modi collectively in the election amid growing use of investigative agencies (ED/CBI/IT) and other methods to oppress various opposition party leaders on alleged corruption, the modus operendi of some of which may be questionable, indicating political vendetta. 

Many regional parties, who were even erstwhile allies of BJP/Modi during the 2019 election or did not have very good relations with Cong/INC, became united under the IND alliance just to defeat Modi/BJP in the 2024 election amid growing use of money, muscle and PMLA power to oppress almost all opposition political leaders/top brass by Modi-Shah duo.

Initially, the IND opposition alliance was not so prominent and had little impact on Indian Main Street and Dalal Street (Mumbai stock market). The market was confident about Modi 3.0 this time too simply because of Modi’s decisive political leadership, immense popularity among the masses and lack of an alternative credible opposition face to compete with Modi politically/financially and become the next PM of the country. Indian market and Modi was itself overconfident and sometimes sounded/looked arrogant about ‘400 paar’ (Modi 3.0 with the thumping majority). Modi and the Indian market were planning (dreaming) about not only the next five years but also the next 25 years assuming rock-solid political stability in the country of almost 1.45 Billion people, having diverse standards of living and thinking. The market was also not ready to discount any Modi odds in any manner.

But that perception changed soon after mid-Feb’24 when the electoral bond (EB) scam was exposed after the SC directive. PM Modi’s honest image was severely tarnished as various EB transactions chronology shows huge quid-pro (‘Chanda for Dhanda’/money for honey/donation to BJP for government business/contracts, policy change and avoid Prison times for any corruption allegation).

Although no political leaders including Modi, Shah, and also various opposition leaders do not take money/bribes personally- it’s all for the party fund, being extensively used not only to fund huge election expenses but also to ‘buy Democracy’. Over the last few years, especially in the 2nd term, BJP/Modi has been using money, muscle and also PMLA power extensively to damage opposition parties in power of various states simply to make India a ‘one nation, one party’ system. But this political strategy of Modi is now backfiring after the EB scam was exposed.

India’s Maharashtra (MH) state is an example, where erstwhile Shiv Sena (SHS-under Uddhav Thackeray) was a pre-poll election ally of BJP/NDA, helping Modi to win 41 LS seats from the state in the 2019 general election out of 48 LS seats (clean sweep in a big swing state). But after a few years, Modi-Shah may have lost patience despite an all-out effort to topple the MH government being run by Shiv Sena CM Uddhav Thackeray through any democratic process/election. Modi-Shah toppled the then Shiv Sena State government in MH, bifurcating the party members/MLAs through extensive use of money, muscle and PMLA/ED/CBI/IT power.

Uddhav Thakaray, his father legendary Balasahev Thakaray has a very good relationship with Modi and they were election allies in the 2019 general election. But despite that, the Modi-Shah duo toppled the Thackeray government in MH and almost destroyed the political future of Uddhav Thackeray, by putting a puppet CM Shinde, an ex-Shiv Sena MLA in the Chair. This BJP strategy of pressure politics has now backfired in MH and BJP is set to lose heavily this time to Shiv Sena (Uddhav Thackeray) simply because of huge ‘sympathy and Marathi pride wave’ in favor of the latter. Also, Uddhav Thakaray is seen as a ‘godfather’ (like his father, the legendary Balasahev Thakaray) and has immense popularity and mass appeal in MH, even higher than Modi.

The same happens with another powerful/influential Pawar family (NCP) in MH/Mumbai. Ajit Pawar, the nephew of prominent NCP leader Sharad Pawar (EX. CONG/INC), an ex-CM who was even threatened many times by Modi & co for various corruption allegations, was eventually made Dy-CM, splitting the Pawar family. Now Ajit Pawar has ‘no face’ to show himself in any election rally of Modi in MH/Mumbai.

Overall this time Indian election wind blowing in favor of CONG/INC/IND and against BJP/NDA/Modi for various factors:

·          No meaningful Modi wave this time due to ten years of anti-incumbent waves amid growing unemployment/under-employment, especially for educated youths and incrementally higher cost of living (inflation). Most of the voters are worried about various economic issues amid widespread rural distress, lack of good employment opportunities, and elevated inflation

·          Also, the lack of any nationalistic issue like the Pulwama-Balakot surgical strike on POK just ahead of the 2019 general election is now going against BJP/Modi

·         A popular election manifesto by INC promising more dole money/Rabin Hood politics for OBCs, other backward sections of the society, and unemployed youths (instead of internships/apprentices) also helped the IND opposition alliance along with the political narrative of electoral autocracy and abolition of caste reservation system by next Modi admin (if elected again)

·         Huge anti-incumbent wave against Modi amid rising employment/under-employment and elevated cost of living (inflation) despite the story of fastest fastest-growing economy towards the $5T mark (nominal GDP)

·         No visible ‘Ram Mandir’ wave; general people want good paying jobs rather than Mandir, Masjid etc

·         No visible ‘nationalistic’ wave against Pak as we have seen just ahead of the 2019 election (Pulwama-Balakot surgical strike) or Kargil war (just before the late 1999 election), which helped Modi and Vajpayee to win amid an all-India nationalistic wave

·         Almost all NDA/BJP allies are not natural/ideological allies; they are contextual allies/political opportunists and most of them are bought in on money, muscle and PMLA power; most of the NDA allies leaders are now weak

·         BJP/Modi has to face strong/very popular regional leaders in various states like in WB (Mamta Banerjee-Didi-TMC), Tejashwi Yadav (Bihar-RJD), Akhilesh Yadav (SP-UP), Uddhav Thackeray (original Shiv Sena-MH), Shivakumar (INC-KA), Kejriwal (AAP-DL), Stalin (DMK-TN), Revanath Reddy (INC/CM-TL)

·         Thus it’s like challenging Team India (full eleven ace players) in IPL T20 with Chennai Super King (CSK) with one or two-star players; there are eleven potential states (big/small) in which  BJP may get zero or almost zero (1-3) seats this time in 2024 general election

·         For the last decade, BJP has solely used ‘Brand Modi’, which is overexposed and the country is now suffering from ‘Modi fatigue’ at almost every step (from petrol pumps to railway stations and Godi/TV media)

·         Despite an all-out effort by Modi for the last few years and Modi’s immense popularity, BJP continues to fail in South India, while Regional parties flourished; another national party INC (CONG) is relatively more successful alone and also with some trusted regional allies (parties); Muslim heavy voter areas is also going against BJP/Modi (now almost 20% of Indian population is Muslim and most of them are against BJP/RSS policy)

·         Andhra Pradesh: BJP ally TDP may win around 10 seats. But Naidu (TDP) may be forced to join BJP to avoid ED/CBI investigation for some alleged corruption cases by his state arch-rival CM YSR; it remains to be seen, whether TDP continues to support Modi/BJP if the latter fails to form the next Federal government in Delhi. Naidu was also a known prominent opposition leader (against Modi/BJP) a few years ago

·         Assam/NE states: BJP may lose seats due to growing uncertainty about CAA/NRC issues (general public harassment in the name of granting citizenships, while there are already citizens of India having all official docs); also Manipur issues have a dented image of Modi despite significant development works in these states border states to counter growing Chinese influence and infra on the other side of the LOC)

·         Bihar: BJP almost forced (blackmailed for some corruption angle) Nitish Kumar of JDU (also current Bihar CM), the key architect of IND (opposition alliance) to join NDA and fight the election as an ally (like in 2019). But Nitish Kumar’s political image has been severely dented in the process of frequent summer sault; his political credibility is at stake now and is set to lose heavily by his erstwhile deputy Yadav (RJD) in both Federal/General election and forthcoming state election. Also, internal conflict in BJP/RSS may ensure a loss of significant seats for Modi in this election

·         Haryana: Kissan to Palwan issues: widespread discontent among public due to farmers and wrestlers protest issues; inadequate employment opportunities in the Indian army (failure of Agniveer employment policy in the army to train someone as contractual temporary soldier/professional mercenary/private soldier in the future-western model?); also there are various caste/OBC issues

·         Jharkhand/Chhattisgarh: Arrested EX CM Soren sympathy wave; organizational and caste issues

·         MP/RJ: Various internal politics/conflicts in BJP/RSS after the removal of erstwhile BJP CMs and top state leaderships by Modi & Co; Cong/INC has also boosted its organizational strength to convert growing anti-incumbent wave into votes

·         KA: No visible Modi/nationalistic wave this time unlike in 2019; Cong/INC organization is very strong here led by Dy. CM Shivakumar  and also CM Siddaramaiah ( both in terms of money & muscle comparable to BJP)

·         UP: Internal conflict in BJP/RSS (Yogi vs Shah); Yogi may be removed as CM after 2-3 months if Modi comes to power; Modi likes short serving puppet CM in BJP states, who can’t challenge his central leadership (PM position) in future; Modi was himself promoted from Gujrat CM (after 10-years) to India CM because of his ‘Gujrat Model’ of development; main opposition party SP and INC/CONG is now in stro9ng position and BJP set to lose some seats despite good development work of CM Yogi/BJP; also caste/religion (OBC/Muslim) factor is now going against BJP this time

·         PB: Punjab is traditionally a weak spot for BJP despite the hard work/effort by Modi. This time BJP/NDA may not get even one seat shown in the estimate due to widespread protests of farmers and some other issues; here CONG/INC and AAP are engaged in a friendly fight

Overall, after 10 years of political stability under PM Modi (BJP/NDA), India may be heading towards a hung Parliament instead of another blockbuster Modi win with 400/350+ seats or even 300+ seats. This time in 2024, BJP may be again washed out in Southern India with almost 50% seats in the rest of India (north, west and east). Top BJP leadership including the Modi-Shah duo is clearly on the back foot now, if we can observe their sudden change in body language, nervous-looking postures, and irrelevant political speeches. Apart from Mandir, Masjid, Mangalsutra, Muslim, Mutton and Machlee (fish), Modi even brought in names of Adani-Ambani-accusing big industrialists to funding Congress with billions of black money (cash) trashed in tempo. EB scam and Modi’s comments about the use of both accounted and unaccounted money to fund political parties may also raise serious questions about corporate as well as political governance.

Also, BJP’s parenteral organization RSS (Nagpur lobby) may have now abandoned Modi-Shah (Gujrat lobby) and favoring Gadkari, Rajnath Singh, or even UP CM Yogi as the next PM of BJP/NDA due to various internal issues with Modi-Shah. In brief, the BJP will lose in Muslim-dominated areas in South, East, and even in West and North India. Although BJP/Modi may get a higher vote share than in 2019 in South India this time, it may not result in more seats.

Overall, most of the ordinary voters across India are more worried about growing unemployment/underemployment, rising inflation/cost of living expense, and corruption rather than Mandir, Masjid, Mangalsutra, mutton/mash (fish), Mandal (caste reservation), and even Ambani-Adani’s alleged political donation with black money.

India’s social media, comprising of mostly experienced political journalists/analysts is buzzing with BJP winning around 200 LS seats against 350+ seats in the TV/Godi (BJP/Modi savvy) media (largely in line with the 2019 election). Accordingly, India's stock market is also still not discounted at all.

In any way, there is nothing impossible in politics/election. BJP top brass is also very much aware of no Modi wave this time as per their changed body language and tone. Modi has given perhaps more than 30 scripted interviews in various Godi/pet media channels in the last few weeks, maybe more than his entire scripted interviews in the last ten years to clarify his position about Muslims. OBC reservation and other controversies; but it may be too late.

Social media experts are now also worried about any EVM manipulation by the BJP to secure the ‘impossible’ 350+ seats. India’s SC may ask ECI to disclose form 17C scanned copy with the actual number of polling (rather than only % of polling) within 48 hours to avoid any EVM controversy after the official counting on 4th June. Looking ahead, for higher confidence in India’s election process, SC may ask ECI to arrange manual printing of VVPAT (with bar codes) and separate counting with the help of a machine (along with normal EVM counting).

Modi-Shah are very experienced politician; Modi has over 45-years of political experience. But Modi usually does not give up batting until the last ball even if it looks sure his team is losing. Modi will not leave the field until the last ball. Accordingly, realizing not very favorable conditions in the largest voting state UP, Modi has brought one of his trusted lieutenants Patil to supervise the rest of the election in the key state UP.

Now depending upon the actual election result on 4th June, there may be more political permutations and combinations in some regional parties. If BJP indeed gets around 200 seats this time, some so-called NDA allies including JDU and TDP may abandon Modi/BJP. But if BJP gets around 250 seats, then it may extend an olive branch to an arch-regional rival like BJD (around 12 seats in OR), TMC/Didi (around 30 seats in WB) and even Shiv Sena (Uddhav Thackeray) with around 20 seats in MH. Modi has already sent a public apology like a signal to BJD (Naveen Patnaik) and Uddhav Thakaray, a few days ago through a scripted interview after some adverse personal comments about them in a public rally. But Uddhav Thackeray may not help Modi this time, although Mamta Didi and Patnaik may keep the offer open ended.

Market impact: Indian election

Overall, initially, India may be heading towards a hung Parliament this time instead of another blockbuster Modi win, which was unthinkable even two months ago. But the Indian stock market is not discounted at all for any hung Parliament-like situation in the coming days, which may cause political and policy chaos to some extent. In that scenario, Nifty may correct 20-30% and USDINR may surge 10-15% before any political & policy stability; if Modi indeed wins 350+ seats, then the opposite may also happen.

India’s current growth story is too much ‘Modi’ dependent (one man story), and there is a perpetual risk after his absence. But BJP is also a cadre-based professional political party along with various credible faces (like Gadkari) for the next leader (after Modi). Even under a Cong-led (IND) government, the Indian growth story may remain unaffected as records show no major differences between UPA (2004-14) and NDA (2014-24). Thus any sharp correction after the election (in the scenario of a hung Parliament) may be a wonderful opportunity to buy the Indian growth story at a deep discount as valuation is supported by solid earnings growth irrespective of any political narrative.

Technical trading levels: Nifty Future

Whatever the narrative, technically Nifty/India 50 Future (22540) now has to sustain over 22700 for any further rally recovery to 22850/22900-23050*/23375 and 23700/24000 and even 25000-26000 levels in the coming days/weeks (if Modi indeed comes to power again with a comfortable majority); otherwise sustaining below 22640, Nifty Future may again fall to 22450/22300-22200 and 22000/21800-21700*/21600 and 21325*/21250-21130/20850, and further 20700-20630/20460-20280/19730 and even 19400-19200-18800/18600 levels in the coming days (under, hung Parliament like scenario; if BJP indeed gets around 200 seats