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Photo: Mint
Photo: Mint

Will Bihar election results change market sentiment?

Indian shares are expected to start lower on Monday, after the BJP conceded defeat in the Bihar assembly elections on Sunday

Mumbai: Indian shares are expected to start lower on Monday, after the Bharatiya Janata Party (BJP) conceded defeat in the Bihar assembly elections on Sunday, and the weakness may rule the markets for a while.

The Grand Alliance led by Bihar chief minister Nitish Kumar surged ahead in nearly thrice the number of constituencies where the BJP and its allies were leading.

The National Democratic Alliance (NDA), led by the Bharatiya Janata Party (BJP), and the Grand Alliance of the Janata Dal (United), or JD(U), the Rashtriya Janata Dal (RJD) and the Congress were the main contenders fighting it out in the assembly elections in Bihar. The last phase of polling closed on Thursday.

According to the Election Commission website, the JD(U) won 71 seats, the RJD 80, the Congress 27 and the BJP 53. Of the 243 assembly seats, the Grand Alliance won 178 seats and the NDA 58.

“This would be a negative for markets. We would expect 2-2.5% correction tomorrow (Monday) morning, but the markets should stabilize by close," said Pankaj Sharma, head of equities at Equirus Securities Pvt Ltd.

Sharma pointed that the possibility of the BJP not winning was partially priced in when the market corrected last week. Investors were buying downside protection last week, sensing that the BJP may not be able to replicate its win at the centre at the Bihar polls.

On Friday, BSE’s 30-share Sensex closed 0.15% lower at 26,265.24 points. It had declined in 11 out of 13 and has eroded more than 4%, or over 1,000 points, since 19 October.

“We also don’t think that this result means that Modi magic is fading because the outcome is more of a result of, (a) BJP vs. everyone else, (b) BJP too started the campaign on issue which work better for JD(U)/RJD/Congress. But, yes..it is true that BJP leadership has to think about how to control the distracting elements of their party," added Sharma.

Others echoes the sentiment that the market was set for a decline on Monday.

“Markets may see a weak open on Monday in a knee-jerk reaction," said Deven Choksey, group managing director, KR Choksey Investment Managers Pvt. Ltd.

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