As the gears of power shift at the Center, can markets learn to love populism and not worry?

Image credit by Mohommad Arshad via AI

Briefing

With the BJP’s poor electoral performance, a realignment of central government spending is possible to reflect the realities and demands of coalition partners. From a stock market perspective, while a boost in rural spending won’t be entirely negative, there could be sectoral rotation.

Hindustan Unilever is up 8% since Tuesday following the election results, while L&T is down over 8%. Both stocks are mirror images of each other. As expectations become stable, the new government may stymie the capital theme and turn populist, moderating taxes and increasing subsidies and income support for the target population. And that could mean some changes. Over the last three years, there has been a premiumization of the market where it was expensive

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