Stock markets are bracing this week for ripples coming from Uttar Pradesh with several marketmen raising concerns over the Centre’s future reform policies in view of anointment of hardliner Yogi Adityanath as the Chief Minister of the country’s most populous state.
Marketmen are particularly concerned about any large-scale selling by the foreign investors who tend to react promptly to any such development.
Any rough sailing ahead for the markets would follow a sharp surge in the recent weeks, including due to a huge mandate given to the BJP in some states, including in UP, which many experts have attributed to the party’s development plank despite its well known pro-Hindutva agenda.
The benchmark indices including Sensex and Nifty have been flirting with record high levels with huge gains in stocks across the sectors, while some experts warned that the surprise selection of Yogi Adityanath as the UP Chief Minister might trigger profit booking including by large foreign investors.
The Nifty had ended at a new peak of 9,160 on last Friday while the Sensex also notched up significant gains to close at 29,648.99.
However, Some analysts are hopeful that macroeconomic factors such as further movement on the GST rollout decision would eventually decide the course for the stock market, after a temporary hit from the development in UP.
Abnish Kumar Sudhanshu, Director and Research Head at Amrapali Aadya Trading & Investments, said last week began with the landslide victory for BJP in UP assembly elections and it fuelled a rally in the markets on expectation of several stalled projects and reforms getting their way for clearance.
The markets even ignored the interest rate hike by the US Federal Reserve and a rally in rupee further fuelled the indices.
“Sweeping victory in country’s largest state Uttar Pradesh provided strength to rupee on the back of stable government along with hope of more and more bold reforms coming in future without any disturbance in Parliament,” he said.