Lok Sabha Election result 2019 - stock market outlook for May 23: This is how indices are expected to react

Thursday's Lok Sabha Election 2019 results will reveal who will form the next government at the Centre for the next 5 years. Most of the exit poll surveys released last Sunday have given a mandate to NDA ruling again. However, the biggest question for investors is -  how will the domestic stock market move tomorrow, 23rd May. Avinash Gorakshakar, Head Research, Joindre Capital believes that the market has welcomed the projection by exit poll surveys of NDA returning to power, but it will be the actual results that will have a real impact on the domestic market. 

The benchmark index BSE Sensex is constantly hovering just below all time highs of 39,570, while the 50 share index NSE Nifty 50 was on the verge of breaking a record high of 11,880 on Monday after exit poll results. Commenting on the likely impact of Lok Sabha election 2019 results announcement on 23rd May, Amar Singh, Head - Advisory, Angel Broking said, ''As exit polls results gave a clear cut view of the current government retaining power, the benchmark indices are expected to hit record highs on bullish investor sentiments ahead of the election results.''

As per the major indices performance in last 5 years, the S&P BSE Banking Index rallied 94 percent followed by IT, which gained 78 percent, and FMCG, which rose 73 percent, during the last 5 years of the Modi government between May 26, 2014 and May 21, 2019. However power index dropped by around 13 per cent and there were concerns related to banking NPAs.

''The exit polls were way above average expectation of 250-260 seats of NDA. However no matter results will likely to be in favour of NDA and the volatility will be there on till 23rd May. Though the rally will be continued in domestic stock market, if BJP bags over 300 seats in Lok Sabha elections," added Gorakshakar.

Also Read: Lok Sabha elections 2019: What are VVPATs, EVMs - How do they work

The exit polls have come out better than expected with the ruling coalition getting a comfortable majority. However, the market has been rallying for the last two days and it has factored the information to some extent. The Exit Polls accord an average of 304 seats to NDA and 118 seats to UPA with rest of the seats going to other parties outside of these two pre-poll alliances. BJP is predicted to win an average of 260 seats while Congress is expected to reach 67 seats in 2019.

Singh said, ''Given the exit polls results released on Sunday, the last day of polling for Lok Sabha Elections, the majority of them gave a clear cut view of the current government retaining power. However, the seats figures varied among the exit polls but they were all unanimous in their view which had a soothing effect for markets overall as it means continuation of the existing policies of the government. 

''The outcome of the exit polls results in markets led a sharp rally this week, with Monday, witnessing the highest single day gain over the past 10 years. The benchmark indices are expected to hit record highs on bullish investor sentiments ahead of the election results, '' Singh added

Nifty 50 index was up 28.80 points at 11,737.90 (0.25%), while the Sensex was up 140.41 points at 39,110.21 (0.36%)  on Monday. Among the 50 stocks in the Nifty index, 33 traded in green, while 17 closed in red.  The shares of IndusInd Bank, Reliance, SBI, Yes Bank, HDFC Bank L&T were among the most active securities today.  

23rd May (Thursday) will be a thrilling day for the wold's largest democracy, as some one billion people will be glued to televisions and internet to know about the election outcome.