Resignations, Rejections, Ram Mandir and Modi – is this is the beginning of the end?

Surprise! Surprise! Surprise!

Who would have thought that BJP would lose Chhattisgarh so badly? Who would have thought that Madhya Pradesh would give us such a nail-biting finish (which everyone, including me, was expecting in Rajasthan). Who would have thought that just a day before the assembly election results, the RBI governor Urjit Patel would resign with immediate effect?

The big surprise – the stock market – which was supposed to move down sharply, ended up closing in the green! This again proves that predicting the stock market movement is not easy. One is not sure about the longevity of today’s stock market positive close, but one thing has been proved that the market is indifferent to which party forms the next government in the three crucial states.

These election results would soon be history as will be Patel’s resignation. Market from Thursday will go back to dancing on various global as well as domestic tunes.

Is this the beginning of the end of the Modi government? Will the Congress, even though it is basking in victory, become confident of winning the general election in 2019?

The Congress got the advantage of anti-incumbency factor in two states where the BJP governments were in the saddle for three terms, and in Rajasthan for one term. A victory by a huge margin in MP and Rajasthan was cause for cheer but, it is not a landslide victory. Congress has a long way to go to win more than 200 seats in the Lok Sabha. The party is weak in many areas. One big problem with the Congress is that it is resorting to populist measures as part of its manifesto. But this kind of strategy cannot take you too far. Rahul Gandhi has moved beyond his ‘Pappu’ image, but he still lacks the charisma of Modi. His speech goof-ups like the ‘Kumbhkaran Yojana’ do not inspire confidence, at least among the young voters. Not sure people are ready to believe he is PM material.

The Congress should use this win as a springboard, but one is not sure how much they can build up on these assembly election results. In the past, they have goofed-up, like in Goa. They acted swiftly in Karnataka and announced support to the JD (S) to ensure that the BJP does not form the government. They need to act smartly with the other opposition parties for the general election to ensure that they can take on Modi in a united manner. Rahul Gandhi has proven that Modi is beatable. But instead of going overboard with these wins, he must remember the famous phrase- One swallow does not a summer make.

For Modi, things are difficult. The RSS ultimatum to the him to bring legislation on the Ram temple at Ayodhaya gives an indication of the pressure of the Sangh Parivar on the Modi government. Without the help of RSS, Modi will find it extremely difficult to win the general election. The resignation of Urjit Patel is another episode that has put the Modi government on the back foot. The BJP allies will act tough with the BJP, with one already quitting the NDA.

Close circles in the BJP suggest that the BJP may have to sacrifice Modi as Prime Minister if it fails to get a clear majority in the next general election. BJP may need the support of the other parties to form the government, but they may not be amenable to give support to Modi. In that case, the consensus candidate could be Nitin Gadkari. But this is too early to deliberate on.

In politics, as I said earlier, a few months is too a long period. The wind flow can change very fast. Historically, the state election results are no indication of what is in store in the general election. Nothing can be said with certainty, for now.

It would be foolish to write off Modi. He is a shrewd politician. He has the knack of surprising opposition with his strategies. Remember, he had survived anti-incumbency when he was CM in Gujarat. I have a strong feeling that Modi will formulate a strong plan to counter the might of a united opposition. This defeat will be a good wake up call for both Modi and the BJP. They can strike back with a vengeance to avenge the assembly election defeats. Hence, expect more action on the political front from hereon.

As far as the stock market is concerned, more nervousness is in store, notwithstanding today’s positive close. With little positive domestic news on the horizon and the global winds not favorable, it cannot sustain a rally. Expect market to remain choppy with a negative bias.

On a lighter note, the market has one event less to worry about—the outcome of assembly elections!


Sunil Damania

Market Expert

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The views and opinions expressed in this article are those of the author and do not necessarily reflect the official VIEW or position of Credent Asset Management Services Pvt Ltd.

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