Exit polls predict BJP win, but this brokerage shares a word of caution

Exit polls have predicted a sweeping victory for the BJP-led National Democratic Alliance (NDA) in the 2024 Lok Sabha elections, suggesting that the NDA may surpass its 2019 tally with significant gains in eastern and southern states while maintaining dominance in the Hindi-speaking heartland.

However, a stock brokerage has issued a word of caution regarding these predictions.

Antique Stock Broking acknowledged that these projections align with their expectations but reminded investors of the historical inaccuracies of exit polls.

“The key highlight of the election, if exit poll expectations come true, may be the NDA making significant inroads in eastern and southern states of India while maintaining its dominance in the Hindi-speaking heartland,” the brokerage stated.

The brokerage pointed out past instances where exit polls have been incorrect.

“Exit polls have a chequered history with incorrect predictions in the 2004 and 2009 general elections, as well as in the recent 2023 state assembly elections of Chhattisgarh and Karnataka,” the brokerage noted.

Additionally, the brokerage highlighted that exit polls have sometimes underestimated the NDA’s margin of victory, such as in the 2014 and 2019 general elections and the 2023 Madhya Pradesh state election.

One reason for potential inaccuracies, according to Antique, is the ‘non-response bias’ associated with the rising number of women voters who tend to favour the NDA.

“As per our interaction with a few political experts, non-response bias has been emerging with the rising women electorate, who has been voting in favour of the NDA at a national level,” the brokerage said.

Various exit polls indicate that the NDA is likely to secure between 362 and 385 seats, suggesting a larger mandate than previous elections.

The NDA is projected to maintain its seat count in the Hindi-speaking belt and gain significant ground in states such as Andhra Pradesh, Bihar, Odisha, Telangana, West Bengal, Tamil Nadu, and Kerala.

Antique Stock Broking’s empirical analysis of voter turnout and winning margins from previous elections provides additional insight.

“Our analysis of 2024 voter turnout and 2019 winning margin suggests that the BJP seems to have an edge,” the brokerage said.

It observed that a drop in voter turnout in seats won by high margins in previous elections typically indicates a lower chance of losing those seats, compared to those won by narrow margins.

The brokerage also highlighted the potential economic implications of a BJP victory.

“We believe if the BJP comes to power with an absolute majority, policy and reform continuity may help in private capex revival. Our model portfolio remains aligned towards domestic cyclical themes,” Antique Stock Broking said.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)