Three new cohorts that could influence the upcoming Lok Sabha elections are stock market investors (about 100 million), social media users (over 500 million) and first time voters (about 130 million).
These are not mutually exclusive pools but are mostly larger than they were in 2019, this is especially true of stock market investors, which now number an estimated 100 million to 120 million voters, about four times larger than five years ago, Morgan Stanley said in a report.
These three cohorts, because of their growing size, will add complexity to the electoral process, which will continue to be dominated by caste and religious groups and farmers who remain the largest voting bloc.
The report said that incumbency can be a positive if voters are feeling prosperous. The challenge is that prosperity differs across voting cohorts. Apart from the absolute level of growth and inflation, indicators like levels of poverty, farmer suicides, terms of trade for rural India, female foeticide, infant mortality, and government transfers form part of how voters assess their prosperity. There is also room to announce fresh policies before the elections, which can influence voters in a particular direction.
History suggests that the Indian stock market approaches general elections with optimism.
"If we were to follow that trend, we would expect the market to price in both continuity and a majority going into the 2024 election. We estimate the market (as measured by the BSE Sensex or Nifty) could be up circa 10 million by May 2024, assuming the election process starts in April and ends with results being announced around the third week of May," the report said.
This assumes that the elections are not advanced to an earlier date, which is always a possibility. Advancing the election date could concentrate the market move into a shorter period.
"If we are right about the pre-election market move, then depending on what the election result is, we believe the market has the potential to swing between +5 million and -40 million - a wide range underpinning how important the elections could be to the market in the short run. The wild swing has historical precedence although we think it could be more acute this time around," the report said.
(With inputs from IANS)
