The Hindu Business Line : Market participants take exit polls lightly

An election official marks the finger of a voter with ink before allowing her to cast vote at a booth in Kolkata on Wednesday. Early exit polls have given the UPA a slight edge over the BJP and allies. However, exit polls have proven to be inaccurate in previous elections. The results will be announced on Saturday. –

Our Bureau

Mumbai, May 13 Market participants are not reading too much into the exit poll figures that showed the Congress-led alliance slightly ahead of the BJP and allies.

No matter who is positioned to form the Government, they will still have to rely on a number of small parties that still leaves the political scenario uncertain, said Mr Vishwas Agarwal, an independent analyst.

Till the Government is in place, there will be a high degree of volatility in the markets, he added.

The political scenario looks as confusing as earlier and it is still too early to jump to conclusions, said Ms Anita Gandhi, Head of Institutional Business, Arihant Capital Markets.

Marketmen also observed that exit polls have not always been right.

“The exit polls should not be taken very seriously in the first place,” said Mr Phani Sekhar, fund manager at Angel Broking. “Domestic players will take the exit polls with a pinch of salt; if you see, they are still sitting on cash levels as high as 20 per cent.”

A recent report from Goldman Sachs said the initial polls suggest that the Congress-led UPA may have its nose slightly ahead.

The markets had a pro-incumbent bias in this election, said Mr Phani Sekhar, Fund Manager, Angel Broking Ltd.

Even though it might not bring much cheer to the markets, a BJP-led Government is not particularly unacceptable either, said marketmen.

But to some extent, larger investors such as HNIs and FIIs will have a wait-and-watch approach if the BJP comes to power, said Mr Agarwal.

“Party manifestos and past records suggest that a UPA-led alliance may focus on rural and social sectors, while a BJP-led Government may concentrate on infrastructure and pro-business policies,” the Goldman Sachs report said.

The possibility of a Third Front Government was feared the most, although the probability of that is diminishing day by day, noted market participants.

The NDA coming to power will not be a major disappointment for the market, but a Third Front Government might be some cause of concern, Mr Sekar added.

It is just that an unknown entity is feared more than known ones, said brokers.

The Goldman Sachs report said: “Although there is considerable uncertainty, we think it is highly unlikely that the Third Front can form a government on its own….

“However, in our view support of a few regional parties is critical for the UPA or NDA to get a majority”.

A decisive result for any of the major coalitions, leading to a quick Government formation, will be seen as positive, the Goldman Sachs report said. “In that event, we believe fundamentals will drive the stock market.”

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