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The political landscape of India is undergoing a transformation, with recent exit polls suggesting a potential shift in power in Haryana. Following the predicted victory of the Congress party in the state, market guru Shankar Sharma drew a striking comparison, likening the Congress to the Chinese stock market, which is experiencing a surge driven by stimulus measures from Beijing.
Sharma, the founder of GQuant Investech, made his observation on Twitter, stating, "In a stock market sense, BJP is looking like the Indian stock market, and Congress, like the Chinese stock market." This analogy implies that the BJP, which is currently in power, resembles the Indian stock market, perceived as having reached a peak and potentially vulnerable to a correction, while the Congress, seen as the opposition, mirrors the Chinese stock market, showing signs of growth and a possible resurgence.
The exit poll results released on Saturday painted a picture of a potential Congress landslide in Haryana, predicting a win for the party in 50-58 of the 90 seats. This would mark a significant loss for the BJP, which held 40 seats in the previous assembly. The BJP's potential decline in Haryana, following its earlier defeats in Punjab (to AAP) and Himachal (to Congress), indicates a shift in the political tide.
The Congress's projected success in Haryana is seen as a continuation of the party's momentum from the recent Lok Sabha elections. The party is also leading in Maharashtra, where assembly elections are scheduled for mid-November. These trends suggest a possible revival of the Congress and a potential challenge to the BJP's dominance.
While Sharma did not explicitly explain his analogy, it is likely based on the perception of a Congress resurgence, similar to the anticipated rally in the Chinese stock market. Conversely, the BJP, facing recent electoral setbacks, mirrors the Indian market, which some experts consider overpriced.
Analysts are predicting a continued rise in Chinese stocks, with investors recognizing the potential for growth. In contrast, experts are advising caution regarding the Indian market, pointing to the high valuation of many stocks. This difference in outlook reflects the contrasting fortunes of the two political parties, as Sharma suggested.
Further emphasizing the sentiment, Christopher Wood, global head of equity strategy at Jefferies, recently reduced his exposure to Indian equities by one percentage point, though he remains 'overweight' on the Indian market. He has, however, increased his weight in China by two percentage points, despite being 'underweight' on the Chinese market.
The comparison drawn by Sharma sheds light on the evolving political landscape in India and the implications for the economic outlook. The potential shift in power, as suggested by exit polls, could significantly impact economic policies and market sentiment. Whether the analogy holds true remains to be seen as the actual election results unfold in the coming days.