Rs 7.5 lakh crore boom! What BJP's victory in Haryana means for stock market investors

After Street favourite Bharatiya Janata Party (BJP) surprised by managing to retain control over Haryana in the state Assembly election results announced during the day, Sensex ended with a 585-point gain with smallcaps, microcaps and PSU stocks celebrating the victory in full fervor.

As a result of the broad-based rally in which all sectors, barring metals, participated, the market capitalisation of all listed companies on BSE surged by Rs 7.5 lakh crore to Rs 459.5 lakh crore.

The biggest gainer of BJP's victory was PSU stocks as the BSE PSU index ended 2% higher with HUDCO and RVNL leading the upside momentum with an 8% rally. Other stocks like PFC, IRCON, IRFC, MMTC, HAL, REC AND BEL ended 5-6% higher.


Shares of Adani Group companies, many of which are also capex plays, also rallied up to 7% with Adani Transmission leading the momentum. The conglomerate's cash cow Adani Ports and the flagship entity Adani Enterprises ended 5% higher.

Also read | Modi stocks rise in revenge mode as BJP seen scoring a hattrick in Haryana elections

Haryana victory signals continuity in economic policy and, therefore, is positive for the markets.

“The victory of BJP in Haryana is a shot in the arm for BJP after the mild setback in the Union elections this year. The victory in Haryana also sends the message that farmers are with the ruling dispensation and this has the potential to slowly revive the farm reforms which had to be shelved following the farmers protests," V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

BJP has been the favourite of stock investors as its leadership has been stable and is seen as being pro-business. While Haryana election result is not a needle-mover, it is seen as a test of BJP's popularity after the Lok Sabha debacle earlier this year in June.

"The result in the Haryana election is better than expected for the market. The narrative that the government will turn more populist is being turned down now and therefore there is a rally in PSU stocks. The order books of these PSUs are driven by the government and now the market is taking an optimistic stance," Sunny Agrawal, Head of Fundamental Equity Research, SBI Securities, told ETMarkets.

The election results were strong enough for the market to break its six-day losing streak. Nifty also ended above the 25,000-level after falling nearly 6% from all-time high levels.

"The market had been in an overbought zone for an extended period, and this decline was necessary to encourage fresh buying interest at lower levels. Despite the recent correction, Nifty50 continues to trade above its 100-day Exponential Moving Average (EMA), which aligns near the 24,400 mark—also coinciding with the 78.6% Fibonacci retracement level of the previous uptrend. The 14-day Relative Strength Index (RSI) is starting to exhibit signs of divergence, indicating a potential pause in the ongoing downtrend," said Vishnu Kant Upadhyay, AVP, Research & Advisory at Master Capital Services.

He expects Nifty to trade within a broader horizontal range between 24,400 and 25,650 in the near term.

Going forward, the market will keep a close watch on the outcome of the RBI policy outcome where no cut is expected but a plausible change in stance to neutral is anticipated. Investors will also focus on the upcoming Q2 results where earnings are likely to improve marginally on a QoQ basis.

"Markets prioritize earnings over election outcomes, and they have responded to the recent general election results more positively than many had anticipated, alleviating previous concerns. While state elections are typically routine, exceptions exist in key states like Maharashtra and Uttar Pradesh,” said Aman Soni, Head of Operations at Prudent Equity.