If BJP crosses halfway mark on its own in 2019, Sensex could reach about 47,000: Karvy

Indian market which is weighed down by both global, as well as domestic headwinds, is looking at the outcome of state elections as well as general elections which could act as a big trigger for D-Street, Karvy Stock Broking said in a report.

State polls will be watched as a barometer of what lies ahead, but general elections matter more. Though it is early days, opinion polls indicate that NDA (led by BJP) is likely to regain power, with a reduced number of seats, this scenario would be welcomed by markets, said the report.

Karvy forecast Sensex to reach 45,000, or 14,000 for Nifty by the end of 2019. If the BJP crosses the halfway mark on its own, Sensex could reach about 47,000.

On the other hand, a loss for the NDA and formation of a coalition government which the market reads to be unstable could lead the Sensex to decline to 30,000, and for Nifty it will be around 9,000 in the immediate aftermath of the elections.

The domestic brokerage firm favours a cyclical stance in their portfolio and favour automotive, capital goods and financial services, along with IT and Healthcare.

Looking at the recent turmoil in financial markets, it is easy to be pessimistic. The macro outlook for India has certainly deteriorated somewhat compared to six months back; however, the outlook remains strong and gives us reason for optimism.

With the election season kicking off with a poll in Chhattisgarh, politics will take centerstage for Indian asset markets for a couple of quarters, investors will be keenly watching these elections as they are close to the general elections and possibly could provide a clue to the mood of the country.

Polls in Chhattisgarh is already over. Polling in Madhya Pradesh and Mizoram will be held on November 28, while Rajasthan and Telangana will vote on December 7.

Two major national parties, the BJP, and the Congress will face head-on in Madhya Pradesh (230 seats), Rajasthan (200 seats) and Chhattisgarh (90 seats), where BJP is already in power, while in Telangana (119 seats) the ruling TRS, a regional party is seeking a second term.

In Mizoram (40), Congress is the ruling party. BJP is in power in MP and Chhattisgarh for three consecutive terms. Anti-incumbency plays a large role in Rajasthan; BJP and Congress have won in alternate elections since 1993.

States account for 60 of the 273 Lok Sabha seats held by the largest member of the ruling coalition i.e. Bhartiya Janata Party.

Karvy, however, cautions against extrapolating results from the state elections, the electorate can vote differently in state and general elections, thus state election results would not essentially be how the electorate may vote in the general elections.