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

Bear attack: Nearly 30% BSE stocks trading below 2008 lows

Riken Mehta
Moneycontrol.com

This is turning out to be a nasty bear phase; in fact worse than the meltdown during the global financial crisis of 2008.

According to data analysed by moneycontrol.com, 697 out of 2400 actively traded stocks on the BSE are trading below the lows seen in late 2008. Back then, most of the stocks managed to recoup a good chunk of the losses as the market rallied dramatically. Two events changed sentiment for the better; one was the UPA coalition returning to power without the support of the Left parties, and the other was the stimulus package that helped sustained the growth momentum in the economy.

Today, the situation is equally bad if not worse. The economy has stalled, corporate earnings are weak, and political turmoil is holding the government back from taking any major reform measures.

But the key difference between 2008 and now is that many of the problems are company-specific, than having to do with the broader economy. In many of the midcaps and small caps which have fallen 50-80 percent, investors are more worried about accounting policies and corporate governance standards than the earnings growth rate.

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Index	Below 2008 Lows	Total Scrips
Sensex	1	30
Nifty	2	50
BSE 100	9	100
BSE 200	17	200
BSE 500	63	500
MIDCAP	20	249
SMLCAP	75	514