Diwali 2023: Elections, other big events that stock investors will watch in Samvat 2080

The forthcoming Samvat 2080 will see a host of developments influencing the market sentiment. While almost all brokerages that replied to Business Today Online Diwali survey talked about risks due to impending general election in 2024, they also talked about geopolitical tensions and its impact on oil and inflation in general, the Fed policy rates and US bond yields, the domestic monsoon, the US elections and last but not the least earnings as key factors to watch.

"Keeping an eye on the events unfolding in Samvat 2080, the three major factors to watch out for are the general elections, the ongoing Middle East crisis, and the upcoming US elections. These key developments have the potential to significantly impact the market dynamics, making them crucial elements for investors to monitor during Samvat 2080," said Arpit Jain, Joint Managing Director at Arihant Capital Market.

In terms of forthcoming elections, Jain said there are good chances of continuity at the Centre. "While this isn't a guaranteed outcome, it's a prominent possibility. However, the US elections could introduce an element of change, potentially viewed positively by the market. Historically, two-phase elections have posed challenges for the markets," he said.

Shrey Jain, Founder & CEO, SAS Online said he expects a stable government in 2024 with a clear majority. He anticipated Fed rate cuts begin in June 2024. He sees normal distribution of rains in line with long period average.

Nikhil Kapoor, Senior VP-Research, JM Financial Services said investors globally are keeping a close watch on US bond yields and anticipating rates peaking by mid-2024, before eventual cuts.

Kapoor said bond yields in the US is likely to stay elevated for much longer period. "Over time, the market has got use to low interest rate environment which is unlikely to come back anytime soon in our opinion," he said, adding that the geopolitical situation will keep crude prices volatile while impeding general elections in India will take the centre stage.

In terms of general elections, Kapoor's team conducted a study on markets performance six months ahead of general elections since 1999 and found that Nifty tends to move up in 6 months’ time frame ahead of elections with average return of 21 per cent and minimum return on 8.7 per cent during the period. He noted that private banks, PSU banks, cement, upstream and OMCs were the best performing sectors in a run up to elections.

"Today’s two biggest risks to global equities today are elevated interest rate and geopolitical tension. Our understanding is that bond yields are expected to stay in the current high ranges during 2023-24, with a marginal negative slope due to a drop in inflation. Economic growth is forecast to see slowdown but geopolitical tensions are expected to ease in both Ukraine and Israel. However, constant hitches are expected to trigger volatility," said Satish Menon, Executive Director at Geojit Financial Services.

"A leeway in the trend of crude prices is likely, which should be positive for India. Thirdly, elections in India and the US, have historically had a short-term kneejerk reaction or a consolidation due to a slowdown in decision making, government spending, or a change in guard. A change in the US is not forecast to exceptionally affect the global market. Although it is not anticipated today, any changes resulting from the election results in India could have a significant impact on the reformist rally,"

Tanvi Kanchan, Head of Corporate Strategy at Anand Rathi Shares and Stock Brokers said she would look out for the US Federal policy decisions and  general elections. There are expectations of interest rate easing further down in 2024 along with inflation, she said.

Meanwhile, Santosh Pandey, President & Head at Nuvama Professional Clients Group said he is slave of corporate earnings and that is what would be his focus area.

"Having said this next year the most important event would be general election and that would definitely set the tone for the market," he said.

Also read: Hot stocks on November 10: YES Bank, Vodafone Idea, Jubilant FoodWorks, Adani Ports and more                

Also read: Diwali Muhurat Trading 2023: Timing, significance, history & strategy for Samvat 2080

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