Equity markets are expected to open strong on Monday, driven by exit polls predicting a resounding victory for Prime Minister Narendra Modi’s party in the seven phased general elections that concluded on Saturday, say analysts and market experts.

The icing on the cake for the equity markets will be the better-than-anticipated GDP growth print of 8.2 per cent for 2023-24 announced on Friday post market hours, they said.

Most pollsters are now predicting smooth sailing for NDA and believe the BJP and their allies to win in a range of 350-400. In 2019, the NDA won 353 seats in Lok Sabha.

Some also expect heightened volatility beginning Monday till final results are declared on Tuesday and the exact number of seats won by the incumbent government are announced. Foreign investors are widely expected to cover short positions as stocks rise, fuelling further rally in equities, they said.

With most exit polls predicting Modi 3.0, markets are likely to heave a sigh of relief and show a positive bias and return to fundamentals/business-as-usual mode especially post June 4 results, they said. 

The exit polls results are likely to calm investors rattled by recent stock market volatility driven by concerns that BJP may significantly fall short of Modi’s ambitious target of 400 seats amid tight races and reduced voter turnouts in several States.  

Equity markets have been displaying anxiety and showing nervousness since April around the impending political uncertainty caused by seven phased general elections from April 19 to June 1.

Last week the Nifty50 saw a decline of 2 per cent to 22,530, down 600 points from an all time high of 23,110 in mid-May.

Prashanth Tapse, Sr VP Research (Research), Mehta Equities Ltd said that Monday morning markets would celebrate the exit poll numbers and open with a gap-up strength. 

“The gap up would be on the back of exit poll reports suggesting BJP can comfortably get 350+ seats pushing the Nifty to look to move-up for new lifetime highs”, he said.

Along with exit polls, there are other factors to trigger markets toward positive trend like short covering, stronger domestic Q4 GDP numbers, early rainfall expectations, lower crude, rally in US markets and easing of geopolitical situation, Tapse added.

Narendra Solanki, Head Fundamental Research - Investment Services, Anand Rathi Shares and Stock Brokers, said “exit poll numbers are very strong for incumbent government and I think markets may not have priced in such strong numbers and we could see some reflection of that on Monday opening trade”.

Overall it’s positive for the markets in short as well as long term. Also the recent released good GDP growth data should also provide support to existing positive momentum, he added.

Manish Chowdhury, Head of Research, StoxBox, a Stock Broking firm, said, “With the exit polls ahead of street expectations, we believe that markets would react positively and the overall tone is positive across all timeframes”.

With an event risk mostly out of the way, StoxBox expects to see higher flows both from domestic as well as foreign investors going ahead, he added.

Amit Goel, Co-Founder and Chief Global Strategist at Pace 360, said, “We anticipate Indian equities to rise over the next 3-4 days, with the Nifty reaching a new all-time high this week. We expect the Nifty to reach approximately 23,200-23,300 levels during this period. Additionally, we foresee the India 10-year yield reaching 6.9 per cent and the INR appreciating to 82.75.”

Dhiraj Relli, MD & CEO, HDFC Securities said that Indian markets may not react majorly to these numbers (Exit poll predictions) on a closing basis.

“In any case, the disappointment or the euphoria may settle down in a couple of days, and the focus may shift to the policy announcements in the first 100 days of the new Government”, he said.