A large portion of the negative sentiment surrounding the Maharashtra Elections 2024 seems to have already been factored into the equity market. Historically, state elections have had little long-term impact on stock performance, as the central government tends to have a more significant influence on market trends. However, given Maharashtra’s strategic importance, there could be a short-term market reaction, which is expected to be brief, according to Nikhil Ranka of Nuvama Asset Management.
Ranka believes that the election results are unlikely to affect the market in the long run. While the market is currently adopting a cautious stance ahead of the results, he anticipates that if the outcome is favorable, the market will likely resume its upward movement shortly after Thursday. On the other hand, Vishnu Kant Upadhyay of Master Capital Services argues that the elections could have a more substantial impact due to Maharashtra’s role as one of India’s most industrialized regions and a significant contributor to the country’s GDP.
Upadhyay notes that a decisive mandate in favor of a business-friendly government could boost investor confidence and attract investment, potentially leading to market expansion. After the new administration is formed, investors will closely monitor any policy changes that could affect businesses.
Global brokerage Macquarie has also highlighted the importance of Maharashtra in the upcoming elections, especially for the National Democratic Alliance (NDA) after its underwhelming performance in the Lok Sabha elections. The firm listed several reasons why both India and global investors will focus on Maharashtra’s electoral outcome:
- Maharashtra holds 48 Lok Sabha seats, making it the second-largest state in terms of representation.
- The state contributes 13-14% of India’s GDP, the highest among all states.
- Its per capita income is 30% above the national average.
- Maharashtra accounts for 16% of India’s total exports.
- It has the highest share of startups (19%) recognized by the Government of India.
- Maharashtra consistently ranks first in attracting foreign direct investment (FDI).
