India's Market Appeal Expected to Rise Following Modi's State Election Wins

According to Yahoo News, Prime Minister Narendra Modi's party's victories in key state elections are anticipated to increase India's appeal to foreign investors and attract more inflows into local equities. Modi's wins in three crucial state elections strengthen his party's position before nationwide polls next year, raising the odds of policy continuity in the world's fastest-growing major economy. Jefferies Financial Group Inc. sees cyclical stocks benefiting the most from the outcome of the polls, while Nuvama Wealth Management says it has become more confident about the government's capital spending. Indian equities rallied on Monday, with the benchmark NSE Nifty 50 Index climbing as much as 1.7% in early trading. Foreign investors have bought more than $14 billion worth of Indian shares on a net basis so far this year, after withdrawing a record $17 billion in 2022. Market participants believe that Modi's party winning three crucial state elections, exceeding exit polls' predictions, may boost investor sentiment for domestic cyclical stocks, including banks, industrial, and power. The results also reinforce the consensus expectations of a Modi win in the 2024 national elections with a greater likelihood of 300+ seats for the BJP. A stable political environment could further boost investors' confidence and drive the markets higher, with the possibility of the benchmark Nifty attaining 20500-20800 levels going ahead.