The government's scheme to provide direct income transfer to farmers is a wild card for voters in Madhya Pradesh and Uttar Pradesh, but it is uncertain if people will vote for the Bharatiya Janata Party in the upcoming general elections, according to Gautam Chhaochharia, MD and head of India research at UBS Securities.
In an interview with CNBC-TV18, Chhaochharia shared his views on the outlook for the market with an eye on elections and on the ground reality of various schemes announced by the government after their trip to UP and post meeting politicians, journalists, policymakers and local people.
“This scheme is definitely a wild card for Modi in Uttar Pradesh and other states,” he said, adding that it is uncertain whether farmers will vote for BJP because of the scheme. The other sense they got was that there isn’t a wave for Modi like it was in 2014 but he is clearly in the fulcrum of all debates, said Chhaochharia.
From the fiscal perspective, Chhaochharia said there is no fiscal space left to drive sustainable economic activity through capex or infrastructure.
He said the market seems to be anchored toward BJP-led coalition scenario and, that market valuations are not pricing in a non-Modi government. The base case for Nifty is 10,000, the upside is at 11300-11400 and downside would be below 10000, said Chhaochharia.
The house, he said, have been cautious on capex cycle and do not see private capex cycle coming back. Therefore, all the industrial, infrastructure capex, cement names remain underweight. However rural-focused stocks selectively would continue to do well in any political formation, he said. Banks and IT services would do well. It would be a stock specific call, he added.
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