New Delhi: Bernstein Research, in its latest India Strategy report, has predicted significant economic challenges and a decline in business sentiment if the Congress-led INDIA bloc forms the government at the Centre. According to the report, the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) securing around 330-350 seats in the ongoing Lok Sabha elections could result in a short-term rally in the stock markets, with the benchmark Nifty index potentially surpassing the 23,000-mark post-elections.
Conversely, the report presents a bleak outlook for the Indian economy and markets if the NDA fails to secure a majority. Bernstein’s analysis outlines possible scenarios and their economic impacts based on the Lok Sabha election outcomes expected post-June 4. It suggests that if the NDA garners fewer than 270 seats, there could be severe consequences for infrastructure development in the short term.
In the report titled “Modi 3.0 & Positioning into Election Results,” Bernstein highlights that funds may be reallocated from infrastructure projects to social initiatives. This shift could compel the private sector to play a larger role in infrastructure development, resulting in only the most viable projects moving forward while others are abandoned.
The report also forecasts a near-term decline in business sentiment, driven by the potential financing of tax breaks and subsidies for the poor through increased taxes on corporations or wealthy individuals. Additionally, Foreign Direct Investment (FDI) is expected to decrease in such a scenario.
Bernstein further predicts significant profit-booking in the near term, with the possibility of low or no returns for the year, should the Congress-led INDIA bloc assume power at the Centre.