Investors brace for possible BJP defeat in Delhi Assembly elections

The stock market may see a decline for few days if Delhi Assembly election results do not favour Prime Minister Narendra Modi-led Bharatiya Janata Party (BJP).

Elections in Delhi will be held on Saturday with results due Tuesday. Multiple investors say Modi faces possible defeat, clouding growth prospects.

"The stock market is concerned whether election results are a local issue or whether they indicate some loss of popularity for the ruling BJP," said Bank of America-Merril Lynch (BofA-ML).

Most opinion polls suggest Arvind Kejriwal-led Aam Aadmi Party (AAP) would win.

"Markets don't like populist measures. I expect AAP to get at least 10 less seats than previous time in Delhi," said Nirakar Pradhan, chief investment officer at Future Generali India Life Insurance.

BofA-ML said the October-December quarter results too have been disappointing for investors, especially with higher bad loans at banks and slowing volumes.

According to the financial major, the FMCG market is likely to see a correction of around 5 per cent over the next 2 months on account of supply of paper, rich valuations and weak earnings.

(Reuters)