The stock prices of several Karnataka-headquartered companies such as Infosys, Mphasis, BEML and Biocon, among others, saw a surge in today’s trade, after the State returned a stable mandate in the Karnataka Assembly elections.
The assurance of political stability in the State with a single party having the majority has had a role to play in improving the market sentiment.
Companies across sectors saw stock prices spike. Bengaluru-based IT majors saw a good run in the stock market on Monday. Infosys’ scrip closed 1.6 per cent higher at ₹1,258.75 and Wipro closed 0.81 per cent higher at ₹386.35. Mid-tier IT firm Mphasis closed 0.74 per cent higher at ₹1,866.
Similarly, pharma major Biocon’s scrip closed 0.96 per cent higher at ₹247.45, real estate company Sobha closed 11.54 per cent higher at ₹552.85, spirits major United Spirits closed 1.31 per cent higher at ₹806.
Public sector undertakings (PSUs) BEL and BEML closed higher too. While BEL closed 0.37 per cent higher at ₹107.70, BEML closed 2.46 per cent higher at ₹1,410.
According to analysts, Congress stormed back to power in Karnataka with a clear majority in 135 out of 224 Assembly constituencies on May 13. This indicates that the State will save itself the trouble of the aftermath of a fractured mandate, like in 2018.
The surety of seeing a stable government and the unlikeliness of a power shift mid-way has been one of the factors for the stock market to react positively on Monday.
FPIs will continue
Analysts said that foreign portfolio investors will continue invest in India, despite the Bhartiya Janata Party losing Karnataka.
Dr V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “Even though the Congress victory in the Karnataka elections was much better than expected, it is unlikely to have a negative impact on markets, which in the near term is driven mainly by FPI inflows backed by improving fundamentals. Karnataka has a long track record of voting out the incumbents. FPIs are unlikely to be deterred by the election outcome.”