Analysing Impact Of 5 State Assembly Exit Polls
Poll of polls predicts #BJP & #Congress may win two states each, hung assembly in Mizoram.
TCG AMC's Chakri Lokapriya & Business Standard's Aditi Phadnis share their views on exit polls & impact on markets. #BQLive
TCG AMC's Chakri Lokapriya & Business Standard's Aditi Phadnis share their views on exit polls & impact on markets. #BQLive
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00:00 Welcome to this special show on BQ Prime.
00:02 I'm Tamannaah Inamdar.
00:03 And before markets open today, the question
00:07 is that how a market is going to digest the exit polls that
00:11 were released last night after polling ended
00:13 for elections in the assembly of five states of this country.
00:18 Now, just a quick two-second context.
00:21 These elections are being keenly watched,
00:23 even though they are assembly elections to states,
00:27 because it's coming so close to the big Lok Sabha
00:30 election in 2024.
00:31 It's being seen as a precursor, as a semifinal.
00:34 Now, in that semifinal, we have the first sort of rush
00:38 of numbers on who could win.
00:41 Having said that, exit polls are not really accurate.
00:44 50% of the polls in 2018 on these same states
00:48 got it wrong.
00:49 But we have come up with a poll of polls,
00:52 where we've averaged some of the major polls across networks
00:57 to give you an idea of what's happening.
00:59 So before I come to my guests, I'm
01:00 going to quickly take you through those poll of polls.
01:03 According to this, in Madhya Pradesh,
01:05 which has a 230-seat assembly, needs a majority of 116,
01:10 the BJP could come back with 124.
01:13 This is the big one that might move the markets today,
01:16 because the BJP already has served four terms here.
01:20 If they come back for a fifth term,
01:22 that tells you that pro-incumbency is really
01:24 a factor.
01:25 In Rajasthan, the BJP is expected
01:27 to win with 104 seats.
01:29 This is an average, remember, poll of polls.
01:32 And the Congress with 85 seats.
01:35 This was expected.
01:35 Rajasthan flips every five years between BJP and Congress.
01:39 So by that logic, this was the BJP's turn.
01:42 Chhattisgarh, the Congress is expected
01:44 to retain its government over there under Bhupesh Bhagel
01:48 with 49 seats.
01:50 This was also largely expected and factored in.
01:53 Telangana, though, will be the big story,
01:55 because according to most polls,
01:57 the Congress is expected to come to power in Telangana,
02:01 where the BRS, led by KCR, has been running the state
02:05 since its inception in 2014.
02:08 So as per this, it's pretty much a two versus two score
02:12 between BJP and Congress.
02:14 Mizoram has also had an election.
02:16 And as per the polls, it will be a hung assembly.
02:19 Now, what do we make of all of this?
02:21 What does it mean for markets?
02:22 What does it mean really for the elections in 2024?
02:26 To speak on this, I'm joined now by Aditi Fadnas,
02:28 Contributing Editor of Business Standard,
02:31 and Chakri Lopria with me this morning, MD at TCG AMC.
02:36 Welcome to both of you, and thank you so much
02:37 for speaking with us on the show,
02:40 ahead of Markets Open.
02:41 I'm gonna take a quick take first from Aditi
02:45 on what is your assessment of the exit polls
02:48 with the regular caveats
02:49 that these are definitely not the results.
02:51 But do you think it's giving us a sense
02:54 that the BJP is, when it fights on Modi's name,
02:59 is fairly comfortable?
03:03 Because that's the cue that the markets are wondering.
03:06 - Well, first of all, yes, of course.
03:11 Whichever election BJP fights on Prime Minister's name,
03:17 it has an added edge,
03:19 but it fought in the Prime Minister's name in Telangana,
03:24 where the exit polls are not giving it
03:26 a very good response.
03:28 It also fought with the Prime Minister's name
03:31 very much in Mizoram, where BJP is nowhere.
03:36 So this election is more about what puzzles me
03:44 about the exit poll outcome,
03:47 is the fact that welfare has not worked uniformly.
03:52 Governments spend a lot on welfare.
03:56 This is an issue which matters a lot to the markets,
03:59 because if government spending goes up
04:02 on seemingly unproductive spending,
04:07 then it has less by way of spending
04:12 on the real issues, and particularly on reform.
04:17 So in Madhya Pradesh, for instance,
04:21 a lot of money was spent in the Ladli-Behna scheme,
04:24 which is basically a kind of a cash transfer for women.
04:29 And Madhya Pradesh, the BJP seems to have done very well.
04:33 So this scheme clearly has been very popular,
04:36 despite very high levels of corruption,
04:39 which were reported during this election campaign,
04:42 which the Congress has made a big cause celebrating.
04:47 Similarly, in Chhattisgarh,
04:51 welfare spending has shown results,
04:55 but it has not shown the same results in Telangana,
04:58 where enormous amounts of money was spent on welfare
05:02 by the BRS, but the BRS is clearly losing.
05:06 So this is a fact which is puzzling me somewhat.
05:09 And I think we need more research
05:11 to get to the bottom of this.
05:12 - Fair enough.
05:13 So there's no one size fits all kind of takeaway
05:16 that we can have on the face of it.
05:18 Chakri, what would markets be looking at?
05:20 Rajasthan was factored in, one presumes,
05:23 but if BJP does come back in Madhya Pradesh
05:26 after four terms, after not really fighting the election
05:29 on a very strong chief minister's face
05:31 like Shivraj Singh Chauhan,
05:32 but making it about Prime Minister Modi with a good margin,
05:36 is that something markets will respond positively to
05:39 as per the exit polls?
05:41 - Well, good morning.
05:43 You know, the markets have been moving
05:44 in the last one or two years
05:46 based on the very strong infrastructure spend
05:48 that the government has been,
05:50 the central governments and state governments
05:51 have been spending in various states.
05:54 Now, on the back of that, in the current,
05:56 if as long as BJP retains its Madhya Pradesh,
06:00 and you know, if there is a surprise in Rajasthan,
06:02 then it's a clear positive,
06:04 because they are big states in terms of their contribution
06:07 to Rajya Sabha seats,
06:09 and that helps the center to pass bills that it needs to.
06:14 So outside of that, I think, you know,
06:17 Telangana is a surprise if it turns out to be true,
06:21 and because it's been a state which has been contributing
06:24 to the national GDP,
06:25 it's one of the top states in terms of GDP growth,
06:29 Mizoram is small.
06:30 So as long as, you know, MP retains Rajasthan,
06:33 there is a surprise, positive surprise,
06:35 then in that case, the markets like it.
06:37 - Yeah, so between Rajasthan and Madhya Pradesh,
06:41 you're going to have about 54 Lok Sabha seats.
06:45 And interesting to note that BJP
06:47 was ever real contender in Telangana.
06:50 Chakri, are you looking at it this way,
06:52 that the BRS, which is the incumbent government,
06:56 would have supported the BJP more in policy decisions?
06:59 What exactly are the cues that market is looking for today?
07:03 - You're right, Tamanna, in terms of that, you know,
07:06 while BRS has been a neutral party,
07:10 it has kind of supported BJP
07:13 in some of the major bills or abstained.
07:16 So from that perspective, it has kind of been a help,
07:21 from that perspective on policy decisions.
07:24 From that perspective, that's the only perspective
07:26 in which the markets would look at it.
07:28 But as long as I think Rajasthan and MP are in the back,
07:32 that should be good for the markets.
07:34 - Okay, so Rajasthan, like I said, was sort of expected.
07:38 Aditi, Rajasthan was sort of expected
07:40 because, you know, it flips every five years.
07:42 And as for the exit polls so far,
07:44 are you getting comfort about the outcome in Rajasthan
07:47 or do you think it's still a close race?
07:49 - I think it's still a close race
07:51 because the reports coming from Rajasthan
07:54 indicate that the government is still quite popular.
07:59 The fact that the BJP has been unable
08:04 or has been unwilling to project the chief minister's face,
08:09 although it doesn't do it in states where it's in opposition,
08:13 but still you do get an idea.
08:15 In this case, there is no idea at all
08:17 who the chief minister is going to be.
08:19 So I think that is an indication
08:24 that even the BJP is putting everything it has
08:29 into the Rajasthan election.
08:31 - Yeah.
08:33 Chakri, now we'll of course know the results
08:36 on the 3rd of December.
08:37 Markets will be able to react to the results
08:39 on the 4th of December.
08:40 Let's look at the various permutations
08:42 and combinations of what's possible.
08:44 And if I look at it from the perspective
08:46 of just BJP right now,
08:48 one out of five, here I'm discounting Mizoram
08:52 because they're never a contender
08:54 and not really in Telangana either.
08:56 So one out of three is expected okay.
08:59 Two out of three, very good.
09:01 Three out of three, stupendous.
09:03 Is that the way to look at it?
09:04 And if I look at it from the Congress point of view,
09:07 if they get two out of three or three out of three,
09:09 would that be a big beat or a big downer
09:13 from the perspective of the BJP and markets?
09:15 - In terms of the markets, I think, you know,
09:18 two out of three would be clearly very positive
09:22 because it kind of maintains the momentum on various spends.
09:26 That is, you know, whether it's infrastructure,
09:27 railway, defense,
09:29 these are all have been the central government's focus areas
09:33 and that has kind of propelled.
09:34 If you look at the latest GDP numbers,
09:36 most of the growth has come from government spends.
09:40 Private capex is still very weak.
09:42 So a continuation of the same will be clearly beneficial.
09:47 Now in the case, the equation tilts
09:49 in the favor of the Congress,
09:50 then it's a question of what are their priorities?
09:53 Will defense, railways continue to be their priority
09:57 or not and where the spend would go.
10:00 Now, if it goes towards farm spending,
10:03 then, you know, the market will have to shift focus,
10:06 but it would lose clearly some of the momentum.
10:09 - Okay, just one more point from you, Chakri,
10:11 and something which Aditi was talking about,
10:13 that what is fueling politics right now in India?
10:17 In Madhya Pradesh, there's the Ladli Behna scheme,
10:20 which for our viewers, just for some context,
10:22 promises thousand rupees to every woman eligible
10:26 in Madhya Pradesh between the ages of 19 and 60.
10:30 On the 10th of the month,
10:32 she will get thousand rupees in her account.
10:35 So that has been a very popular scheme
10:36 started earlier this year
10:38 by the Shivraj Singh Chauhan government
10:40 in all of the states, in Chhattisgarh,
10:42 in Rajasthan, in Telangana.
10:44 You are seeing large spends and promises of large spends
10:48 by the state governments and potential, you know,
10:52 people coming to power, potential governments,
10:56 promises to put money in the hands of people,
11:01 whether it's insurance coverage,
11:02 whether it's just direct benefit transfer and cash payouts.
11:05 Chakri, is the market factoring that in?
11:08 Like we saw a run up in insurance stocks,
11:11 and for a variety of reasons,
11:12 but also because every state government
11:15 is promising to cover more and more
11:18 of the Indian public in terms of health,
11:20 the accident, et cetera, with insurance schemes.
11:23 You're giving more cash payouts.
11:25 Is this a factor that markets are looking at at all?
11:27 Because this is only going to increase going into 2024.
11:30 Absolutely right.
11:32 In terms of, you know, post COVID,
11:34 the impact of focus on health
11:36 is clearly increased across the nation.
11:38 And the nation and also the people expect that
11:41 in terms of rebates, in terms of health coverage,
11:45 or whether it is a small payout,
11:47 you know, some kind of small contribution
11:49 towards insurance.
11:51 So I think insurance will, or rather healthcare,
11:54 including insurance, will be a very important focus area,
11:57 whoever comes to power.
11:59 Second, in terms of what has happened
12:01 with all the infraspendent that we've seen,
12:04 whether it is the roads, bridges, dams, et cetera,
12:08 that has been, metros that are being built,
12:10 it has created employment of the construction workers,
12:15 which is a very big chunk across India.
12:18 Now, whether it is the state government
12:19 or central government,
12:21 metro work has been very strong,
12:23 railway work has been very strong,
12:24 railways is an issue,
12:26 and national highways building has been very strong.
12:29 So this has generated a lot of employment,
12:31 and that is also a factor which I think contributes
12:34 to thinking of the people in who they vote for.
12:38 Just a word from you on all of these,
12:41 call it freebies, call it dravidies,
12:44 call it infraspends, call it,
12:47 not infraspends, but social sector spends.
12:49 We're seeing more and more of this.
12:51 Is this becoming a big draw for voters
12:54 and also for women voters specifically?
12:57 I see a lot of schemes directed at women voters,
12:59 like in Telangana, for example,
13:01 the Congress has promised an electric scooter
13:03 for every girl if they come to power.
13:06 - That's for me?
13:09 - Yes, yes, Aditi.
13:11 - Okay, so yeah.
13:12 So welfare spending is a very big issue,
13:15 but it has different effects in different places.
13:19 So people are asking for more and more,
13:21 and governments are unable to find things
13:26 that they can finance for low-income groups.
13:31 For me, this election is much more important
13:34 because if the result does not go in favor of the BJP,
13:40 the optics will be difficult.
13:43 Going forward, having put on the table the fact
13:49 that assembly elections rarely affect,
13:52 particularly of late, Lok Sabha elections,
13:56 we could be faced with a situation
14:00 where a strong and disurgent BJP in the Lok Sabha
14:05 may be surrounded if they exit polls.
14:09 You know, they are predicting,
14:10 some of them are predicting hung assemblies
14:12 in both Madhya Pradesh and Rajasthan.
14:15 If the BJP has a bevy of hostile, actively,
14:20 or passively hostile states to reform,
14:23 and is in power strongly at the center,
14:29 what will that mean for ongoing reforms,
14:32 which the center has to help?
14:35 That is an issue that should concern the markets,
14:40 if not worry them.
14:42 - All right, so a lot to wait and watch.
14:44 We're going to unpack all of this for you
14:46 on 3rd December as well,
14:48 and on 4th December before markets open, so do tune in.
14:52 If you want to come in for very pointed research
14:55 and data-driven coverage on the election polls at a time
14:59 when you're going to have a lot of information
15:01 thrown at you, so if you want that short, snappy,
15:03 and specific information, do join us back on BQ Prime.
15:07 Meanwhile, thank you so much, Chakri and Aditi,
15:09 for speaking with us today.
15:10 - Thank you so much.
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