Why market raced post 2008 Delhi, Rajasthan, Madhya Pradesh, Chhatisgarh, Mizoram polls

Riken Mehta 
Moneycontrol.com 

Follow me on Twitter @mehtariken 

In 2008, when Delhi, Rajasthan, Chhattisgarh, Madhya Pradesh and Mizoram held assembly elections, the results were declared on December 7, a Sunday. On that occasion, the market was hoping for a 4-1 score line in favour of the Congress, since the consensus view was that a poor showing in state polls would hold the UPA government from pursuing further reforms. Eventually, Congress won in three out of five states, losing Madhya Pradesh, as expected, and Chhattisgarh, in a closely fought battle. The following day, the Nifty and Sensex surged over 2 percent.

But the upbeat mood on the bourses were not the derivative of election results alone. On the same day as the poll verdict, the government announced a fiscal stimulus package to revive India’s economy, which was feeling the aftershocks of the global financial crisis. In the next trading session (December 9 was a public holiday), indices climbed another 5 percent.

Indices 8-Dec-08 10-Dec-08
Nifty 2.58% 5.17%
Sensex 2.20% 5.38%
Bank Nifty 1.68% 2.71%
FIIs (Buy)
Rs 460 cr
Rs 988 cr
Rupee 49.22 49.12

Difference between 2008 and now
Nifty made a low of 2502 on November 20, 2008 few days prior to state election results. In 2013, Nifty is trading close to its all-time high. After state election results in 2008, Nifty has never revisited lows of 2502 so far.
In 2008, developing economies like US and UK were in a sub-prime mess whereas in 2013, they are leading the way. Positive global cues in 2013 compared to 2008.
India’s Q2 GDP in 2008 was 7.6% whereas in 2013, Q2 GDP is 4.8%. Domestic consumption story has slowed down.
In 2008,  Congress won three out of five states and came into power with majority. In 2013, will it be BJP?
In 2008, rupee was around 49 mark, In 2013 rupee is around 62.

2008 poll results
States Congress BJP Others Total
Madhya Pradesh 71 143 16 230
Delhi 43 23 4 70
Rajasthan 96 78 26 200
Chhatisgarh 38 50 2 90
Mizoram 32 MNF 3 5 40
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