State Polls 2018: The power-packed battle and its impact on markets

The ongoing state elections, whose outcome gets announced on the 11th of Dec, are being touted as a “semi-final” to the high-octane general elections to be held in 2019. Markets will most likely sway vigorously to the tunes of the outcome.

November 21, 2018 1:54 IST | India Infoline News Service
The election season has set upon us! With polls having been completed in Chhattisgarh, Madhya Pradesh & Mizoram will vote on 28th Nov, while Rajasthan and Telangana will do so on 7th Dec. These state elections, whose outcome gets announced on the 11th of Dec, are being touted as a “semi-final” to the high-octane general elections to be held in 2019.

What is the scenario for these three primary states?

Rajasthan: For this western state, there is major resentment against the incumbent Raje government. The CM’s popularity is at rock bottom after one term. Problems of drainage and cleanliness, unemployment, and price rise have the voters concerned. The inaction of the government regarding these issues and factionalism within the BJP have dwindled Raje’s popularity further.

Former BJP leaders such as ex-Union minister Jaswant Singh’s son Manvendra Singh, lawmaker Ghanshyam Tiwari, Jat leader Hanuman Beniwal, and torch-bearer for the Gujjars, Kirori Mal Bainsla, have left the party. Though they may not have a standing of their own, by swaying their respective strongholds, they could compound Raje’s problems.

For now, it seems Congress’ young gun and state president Sachin Pilot is emerging as the most preferred candidate for the top post, disregarding the probable CM-candidate for the Congress Ashok Gehlot.

Madhya Pradesh: Results of the MP elections are closely anticipated as they will indicate a drift of BJP’s fortunes for the 2019 general elections. CM Shivraj Singh Chouhan’s popularity seems intact, even though he battles allegations of corruption and sloppy development. Here, the anti-incumbency is purportedly focused on sitting MLAs as reports of excesses at lower levels have come to the fore. However, what works in BJP’s favor is the internal factionalism in Congress’ ranks as senior leader Kamal Nath, youth face Jyotiraditya Scindia, and former CM Digvijay Singh vie for the top post.

Chhattisgarh: The Congress is trying to overthrow the BJP-led Raman Singh government in Naxal-affected Chhattisgarh, which is fighting a 15-year anti-incumbency. Incidentally, the difference of votes between the Congress and BJP during the 2013 elections was merely 1%. However, here, a triangular contest is expected as Mayawati’s BSP has tied up with Ajit Jogi’s Janta Congress Chhattisgarh. With SC and tribal votes under their belt, the BSP-JCC combined will be a daunting force in the state and may act as the kingmaker.     
The state’s polls that happened in two phases on the 12th and 20th of Nov witnessed a voter turnout of nearly 72%. However, the number may go up given that the data we have is only provisional.

What opinion polls say

Opinion polls suggest that Rajasthan is surely tilting the Congress way, owing to heavy anti-incumbency against Vasundhara Raje Scindia. ABP News-CVoter and C fore surveys have predicted that the grand old party will advance with 142 and 124-138 seats, respectively, in the 200-member assembly.

Meanwhile, in MP and Chhattisgarh, where the saffron party has ruled for 15 years, pre-poll surveys suggest a minor swing, indicating that the tide can shift either way. The ABP News-CVoter opinion poll suggests that Congress will win 122 seats and BJP 108 seats in the 230-member MP assembly. The same opinion poll indicates that Congress will win 47 seats, while BJP will grab 40 seats in the 90-member Chhattisgarh assembly.

Meanwhile, the India TV-CNX Opinion Poll shows that Shivraj Singh Chouhan is all set to seize a record fourth term in MP as it projects that BJP may win 128 seats, while the Congress will clinch 85 seats, BSP 8 seats, and others 9 seats.

So, how will the markets react?

Will BJP’s chief vote-catcher Narendra Modi be successful in working his magic again? His emotive and rhetoric-loaded speeches may work in MP and Chhattisgarh, but it seems that Raje in Rajasthan has angered the voters enough. The PM might find it difficult to bridge that gap with the voters.

Whatever the case may be, these elections are all set to be a close call between the two biggest national parties.
Meanwhile, the markets will be closely tracking election results. If BJP loses in one of the three states, the markets will probably remain unaffected and deal with it. However, if it loses in two of three states, it could send markets in a tizzy.

In case BJP loses all the three states, it could lead to an upheaval, casting a dark shadow on the market as wary investors might be concerned about the 2019 Lok Sabha elections.

Thus, as BJP and Congress look for a shot in the arm ahead of the general elections, markets also await the results of these elections with bated breath.
A short-term spike in volatility in the markets may be expected as sentimentally, the results of the ongoing elections will set the stage for the 2019 LS polls. Markets will most likely sway vigorously to the tunes of the outcome.

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