Market to remain tepid on Monday if BJP wins 105-110 seats in Gujarat: Ajay Bagga

Talking to ET Now, Ajay Bagga, Market Expert, says market reaction on Monday will be very asymmetrical because a BJP victory is already factored in and only an above 130-seat win will see the market rally.

Edited excerpts:

The topic on everyone’s mind is what is going to happen on Monday. Do you believe though that the large part of the move perhaps in the near term would be behind us because the exit polls are already indicating a saffron victory and you have already seen a move coming in for the market?

Yes, I was fortunate enough to attend the FICCI AGM and here the prime minister and the FM spoke and two or three points came out. One, market reaction on Monday will be very asymmetrical because you are factoring in a BJP victory so at 105, 110 seat win, market will be tepid or mildly disappointed.

Above that say a 130, then the market will break through the upwards resistance but anything below that will be asymmetrical and you could see market reaction coming in. That way, the market is delicately poised.
This is what came out from the Delhi visit and talking to a lot of industrialists, a lot of the SMEs: one, the expectation from the government if the Gujarat victory comes through, is that the fiscal might not slip as much as say was anticipated a week back. They might hold the fiscal.

Second, very big thing is now the government goes into election mode and so Prime Minister Modi transforms into candidate Modi. We saw that with the 51 Gujarat election rallies that he held and that could become a full time occupation.

Third big part is that they have a map in place, they have charted out the next 15 months very meticulously. The prime minister spoke about 21 sectors, 87 legislations having being done and more coming.

I was looking at the spatial distribution of where they have given out LPG which connections. Three crores rural women have got LPG connections. So, on a 20 crore household base in India, you have given out three crore free connections. Look at the kind of welfare measures that have come in already and you can expect more of that.
Those were few of the key takeaways. I will talk about what that means for the market.

Do you think HDFC Bank irrespective of it being such a big performer year to date, still makes for a case of a re-rating even from these levels?

I would not be able to really comment on one particular stock but market leaders do command a premium and HDFC Bank is amongst the jewels of any Indian portfolio. That way, the market is really looking at this fund raising very closely and it has been a strong management.
I have been a holder of HDFC Bank for decades now, right from the inception and would not be able to comment more than that but private sector Indian banks without the NPA mess remain a very sweet spot for investors into India.