The upcoming general elections is expected to disrupt the tranquility of India's stock market, observes American multinational investment bank Morgan Stanley.
The investment bank expects stocks to rise in the run-up to the Lok Sabha elections in 2024, in keeping with the general historic trend. However, if the outcome of the polls turns out to be contrary to the expectations of the investors, there is a chance that the markets may decline as much as 30 per cent, it warned.
If the opposition's umbrella alliance, INDIA, comes up with a "credible seat-sharing arrangement" it can polarize the general elections and reduce the predictability of the outcome in May, analysts at Morgan Stanley point out.
“A potential change in government could lead to changes in the direction of policy reform and execution leading to poor investment sentiment,” a Bloomberg report quoted the investment bank as saying.
Despite a possible unpredictability in elections, the investment bank maintains a base case where the BSE and Sensex may rise up to 14 per cent next year, if the BJP government, under Narendra Modi, retains power.