U.S. Chamber of Commerce
U.S. India Business Council
For the past six weeks, people in India and around the globe have been closely watching India's 17th national elections to see how the 890 million-strong electorate will vote. The wait is now over. While the results are not yet final, there is no doubt that the BJP won a commanding victory.  Here is the quick take from USIBC as of Thursday morning.
Prime Minister Narendra Modi and the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) achieved a historic victory, delivering PM Modi a second term with even larger margins than 2014. A second term for Prime Minister Narendra Modi is a particularly hard-won victory that eluded the party’s previous stint in government under Prime Minister Atal Bihari Vajpayee in 2004. The NDA is expected to bring in a commanding majority of 340+ seats out of 543, making significant gains in the east and northeast and retaining its traditional bases of support. The Indian Congress National (INC)-led United Progressive alliance will see a decline in its standing at the national level, holding just 80 seats in the election. 

U.S.-India Business Council Commends Prime Minister Modi On His Historic Re-

Election. Click here for the full statement

Markets jumped in response to Modi's projected victory with the Sensex and Nifty hitting record highs. While these gains were tempered by late day profit taking, the Modi victory is viewed positively by investors hoping for further reforms and economic growth. However, the landslide victory will also turn up the pressure of the Modi government to deliver on the economy and meet the jobs expectations of his base, which includes a large youth demographic. 
India’s elections are the largest and one of the most complex in the world and the 2019 voter turnout hit an all-time record of 67.1%. Out of 890 million eligible voters this year, about 432 million were women and around 15 million were first time voters between the age of 18 and 19 years. This demographic characteristic not only impacted the voting pattern but will also chart out the course for the next five years.  
Graphics: Times of India  More Results: http://results.eci.gov.in/
Key State-Level Results
Results from each state are critical to determining the mandate with which Prime Minister Modi will govern in the years ahead. Concurrent with central elections, four Indian states went to the polls for their state assembly elections - Andhra Pradesh, Arunachal Pradesh, Odisha and Sikkim. Here are 4 key takeaways from the subnational level: 
  • State Assembly Elections
    • Andhra Pradesh: Regional Party Champion and former Andhra Pradesh Chief Minister Chandrababu Naidu lost by a landslide to Jagmohan Reddy (YSR Congress), who is expected to become the state's next Chief Minister.
    • Arunachal Pradesh: A BJP victory solidified the party's inroads in the northeast. During his first term, PM Modi prioritized the northeast for infrastructure development projects and emphasized devolution of finances from the center, both key issues for Arunachal Pradesh. 
    • Sikkim: With 32 constituencies, the election split seats between regional parties - the Sikkim Democratic Front and Sikkim Krantikari Morcha with the SDF currently leading.
    • Odisha: The Biju Janata Dal (BJD) will continue its stint as the incumbent government, leading Naveen Patnaik to his fourth term as Chief Minister.
  • UP, Maharashtra, Gujarat Remain Key BJP Strongholds: Despite initial rumors of weakness, the BJP has continued its dominance in Uttar Pradesh, Maharashtra and Gujarat. Out of 80 seats, the BJP is expected to win 60 in UP, leaving its competitors fragmented. The BJP similarly held firm in Maharashtra and Gujarat, where the party was expected to lose seats. This victory has demonstrated BJP's ability to hold its traditional bases.
  • BJP Makes Inroads in West Bengal, Odisha, and Arunachal Pradesh: The BJP notched significant victories in the east and northeast. In addition to wins in Arunachal Pradesh, the BJP picked up 17 of 42 Lok Sabha seats in West Bengal, a significant jump from the 2 seats the party won in 2014. The BJP also doubled its seats in Odisha from 2014.
  • Congress Wins in Kerala and Punjab: Despite the dismal national showing for Congress, the party has maintained its hold in Punjab and performed well in Kerala.
Market Reaction
Stock markets surged early this week in response to exit polls reflecting on a decisive win for Modi and the BJP, and rallied again early Thursday with the Sensex crossing the 40,000 level for the first time.  The Nifty too crossed the key 12,000 market to set a new record high.  Enthusiasm for Prime Minister Modi’s re-election – seen as representing continued stability and strong leadership needed to drive forward economic reforms – also fueled gains in the benchmark stock indices and drove bond prices to a 13-month high.
Despite a vote count suggesting a sweeping mandate for PM Modi, the markets cooled significantly Thursday afternoon as stock market players sought to capitalize on the speculative gains made earlier in the day.  Escalating concern surrounding rising U.S.-China tensions also contributed to the market drop.  
With the Indian National Stock Exchange now closed for the day, markets may react to post-election commentary on Friday, but are likely to stabilize relatively quickly.  In the short term, we anticipate a moderate positive influence on the stock market from the prospect of a stable and pro-business government for the next five years.  Post-elections, however, the ability of the market to sustain gains will depend on fundamentals like corporate earnings and global trends, as well as the Modi government’s actions to continue on a market reform-oriented trajectory.

For more information on Indian elections, please contact Sandip Samaddar

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