D Day is finally here when votes for Gujarat and Himachal Pradesh state assemblies will be counted. It would be all over in a few hours after counting begins today morning. Half the suspense is over when exit polls predicted that the BJP will continue to hold Gujrat and will wrest Himachal Pradesh from Congress. The margin of victory in Gujarat is crucial and the exit polls suggest the number to be around 110 plus/minus 5 seats. The BJP had 115 out of 182 in the last assembly.
This time around the Congress has put all at stake in the state and have finally appointed Rahul Gandhi as the Congress President. The election has been fought on a no holds barred basis and the Congress is looking upon it as the resurrection of the party.
Looking at the election results from the market perspective one sees that the same has become an event and could cause markets to make intermediate top or be the cause of the last leg of the euphoric rally. As mentioned two weeks ago, a result better than expected could cause a sharp rally and a new top surpassing the 7th November high is likely. Euphoria or panic typically last for three days. Therefore, a better result would lead to a new high, euphoria and then profit taking. A worse off result would lead to a sell off and then consolidation. In either case correction or profit taking are a maximum of three or four days away. One must use this opportunity wisely.
Coming to the markets last week, they were under pressure and only the exit poll rally helped markets which were in negative territory till then to become positive and close with weekly gains. BSESENSEX gained 212.67 points or 0.64% to close at 33,462.97 points. NIFTY gained 67.60 points or 0.65% to close at 10,333.25 points.
Shares of Shalby Limited, the hospital chain and were a disappointment. The effect of the exit poll just did not matter and shares closed with losses of about 3.53% at Rs 239.25. Shares were issued at Rs 248 and the company had raised Rs 480 crs by way of a fresh issue and an offer for sale of 10 lakh shares.
Today would be a high volume and volatile day. Make the best use of the same.
