How to read the election numbers is probably the most important question on Investor’s mind. Here are some combinations and its impact on the market.
The best case with a negligible chance is a scenario where the leading coalition gets over 200 seats. This would be expected to cause the markets to soar immediately and would be good longer term too.
The worst is the scenario where both leading coalitions have less than 160 seats. Bad for equities in the short and long term.In this scenario, both leading parties would have fewer than 140 seats. This would not only raise the
chances of a third-front government, but also need a long time for things to settle.
In the base case, at least one of the coalitions will have between 160 and 200 seats. If the difference between the two coalitions is more than 25 seats, the market would likely perceive the results conclusive and take it positively. If not, the process could be chaotic. Either way, uncertainties could remain high in the market based on the course the coalition formation process takes with Horse Trading taking the center stage amongst Highly Corrupt Politicians and elected representatives of the country.
As they say, the only thing predictable in such events is the unpredictability.