From Streets to Stocks: Can CJP protest, Sonam Wangchuk's hunger strike shake Indian stock market sentiment?

While it may be premature to conclude that the ongoing protests by the Cockroach Janata Party (CJP) and activist Sonam Wangchuk's hunger strike will affect market sentiment, investors are keeping a close watch as any escalation could have broader political implications.

The question of whether these developments could spook Dalal Street is still a distant one, but it does exist.

Protests and strikes- hallmarks of a vibrant democracy- rarely unsettle markets unless they materially increase the risk of political instability. At present, neither the CJP protests nor Sonam Wangchuk's hunger strike appears to pose such a risk.

On Monday, the "Sansad Chalo" march of the CJP turned into violent confrontations with the police. As per reports, CJP leaders Abhijeet Dipke, Saurav Das, Ashutosh Ranka and Gitanjali Angmo said the protest would continue until the government addressed the group's demands, which include fixing accountability over alleged examination irregularities, the resignation of Union education minister Dharmendra Pradhan, and justice for students affected by the NEET paper leak.

Besides, activist Sonam Wangchuk, who has been on an indefinite fast since 28 June, reiterated that his indefinite hunger strike would continue unless the government accepted responsibility for failures in the education system or Parliament assured action on the issue.

As per a PTI report, the Delhi High Court on Tuesday proposed shifting Wangchuk from Safdarjung Hospital, Delhi, to Medanta Hospital, Gurugram.

Dalal Street is driven as much by sentiment and narratives as by fundamentals. At a time when the conflict in the Middle East has emerged as a key concern for markets, such developments at home could serve as an additional irritant for investors.

While the agitations in Delhi have no direct impact on the stock market, some market participants fear they could make foreign portfolio investors (FPIs) more cautious.

Their concerns stem from recent political upheavals in neighbouring countries such as Bangladesh, Sri Lanka and Nepal, where prolonged protests reshaped the political landscape. However, drawing a parallel with India appears overstated, given the country's relatively stable macroeconomic environment and the absence of any widespread social unrest.

However, the stock market appears largely unfazed by the ongoing protests, with experts saying they are unlikely to trigger any significant policy shifts or macroeconomic repercussions.

"Markets will not be affected by agitation. Our economy doesn’t face any risk of an aggregate supply crisis or a high-inflation regime. Therefore, nationwide large-scale escalation to the extent of impacting economic growth is most unlikely," noted G Chokkalingam, the founder and head of research at Equinomics Research.

As per Chokkalingam, the only concern for the market is crude oil prices.

"If the Middle East conflicts continue for another one or two months and oil price also zooms to over $100 a barrel, then the economy and markets could be impacted adversely," said Chokkalingam.

However, Chokkalingam added that the state of the Iranian economy is unlikely to allow a long-lasting war. If war persists US economy will also see again reversal of inflation rate and slowdown of GDP growth rate.

Harshal Dasani, Business Head at INVAsset PMS, underscored that one should separate what makes headlines from what makes it into an FPI allocation model.