BJP leading in UP, falling oil prices, ease in Russia-Ukraine conflict cheer up Indian markets

• Sensex continued its sharp rally from Wednesday as exit polls suggested BJP’s win in 4 states, crude oil prices fell and Russia-Ukraine war seemed to have eased.
• Early trends in counting show that BJP may come to power in Uttar Pradesh, Goa, Manipur and Uttarakhand from five states that went to poll.
• Adding to the positive waves, crude oil prices came down after a significant rise in the last few days.

The Indian markets witnessed a relief rally on Thursday after days of bloodbath in the market on excitement of BJP coming to power especially in an important state like Uttar Pradesh.

Early trends in counting show that the Bharatiya Janata Party (BJP) may come to power in Uttar Pradesh, Goa, Manipur and Uttarakhand from five states that went to poll.

This is an important factor boosting the market sentiment as the state election will decide how the ruling party i.e., BJP approaches the general elections due in 2024.

Following this, Indian benchmark indices Sensex and Nifty 50 surged 2% each on Thursday.
Analysts believe favourable results for BJP in state elections means it will form a stable government again in the upcoming general elections in 2024 with continuation of reforms and policies implemented by the current government.

“The markets gained more than 2% [on March 10]. One of the factors is the start of the settlement of the war between Ukraine and Russia. This will reduce tensions between the two countries, and international markets will see it as a positive and good move. Furthermore, the probability of the BJP forming a government in 3–4 states out of 5 is high, and the BJP will form a stable government again in the upcoming centre elections [sic] in 2024, confirming to investors that the reforms initiated by the BJP and policies implemented by the current government will continue,” said Sudhanshu Singh of MoneyMakers India Securities.

Moreover, the fall in crude oil prices after a significant jump also boosted the rally in the market after UAE promised additional oil production to support the market, which was being disrupted because of sanctions on Russia after it invaded Ukraine.

Reportedly, the UAE is among the few members of the Organization of the Petroleum Exporting Countries (OPEC) that have spare capacity to increase output. Moreover, the US has also asked oil producers worldwide to increase production if they can.

And after Ukrainian President Zelenskyy indicated that they were no longer interested in North Atlantic Treaty Organization (NATO) membership, which was the main reason behind the war, market sentiment improved as this means the war would cool off.

Markets across the world were up after crude oil price came down and hopes of de-escalation in the ongoing war.
“...The BJP-led Yogi [Adityanath] administration is on the verge of gaining a clear majority in one of the most politically crucial states in India, Uttar Pradesh, and other states, with the exception of Punjab, are also indicating favourable advances for the BJP. However, the market's resurgence is attributed not just to state elections, but also to good developments in the Ukraine situation. The election effect appears to be transient, but if the Ukraine crisis continues to improve, we may witness a market reversal,” said Ravi Singh, vice president and head of research at Share India Securities.


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