Sensex, Nifty 50 end flat: Why is the Indian stock market nervous despite NDA's likely landslide win in Bihar election

Stock market today: At first glance, it appears that the likely landslide victory of the National Democratic Alliance (NDA) in the Bihar election 2025 has failed to cheer the Indian stock market. Trends at 4:20 pm on Friday showed the NDA was leading on 193 seats and had already won 7 seats, and the Mahagathbandhan was leading on 36. The trend is in line with market expectations of an NDA victory in the assembly elections. After the bumper voting turnout, most exit polls had predicted a decisive victory for the NDA.

Meanwhile, the Sensex closed 84 points, or 0.10 per cent, up at 84,562.78, while the Nifty 50 settled at 25,910.05, up 31 points, or 0.12 per cent. The BSE Midcap index slipped by 0.03 per cent, while the Smallcap index rose by 0.06 per cent.

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Why did the Indian stock market end flat?

The Senex ended flat as the gains in shares of select heavyweights, such as Reliance, SBI and Axis Bank, were largely offset by losses in those of Infosys and ICICI Bank.

The domestic market ended flat, but it still outperformed its global peers. Overnight, the S&P 500 crashed 1.7 per cent while the tech-heavy Nasdaq plunged 2.3 per cent.

Among Asian peers, Korea's Kospi crashed 4 per cent, while Japan's Nikkei and Hong Kong's Hang Seng plunged 2 per cent each.

In Europe, the UK's FTSE, France's CAC 40, and Germany's DAX fell by 1 per cent each during the session on November 14.

Amid this bloodbath in major global markets, the Indian stock market's intraday loss appears too small.

In fact, the domestic market is exhibiting resilience due to better-than-expected election results.

"The domestic market is actually outperforming other Asian markets today, especially considering what happened in the US market yesterday. In relative terms, this strength is a response to the better-than-expected election results. If not for the weak US cues and the poor performance of Asian markets, we would have seen a much stronger rally," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

But why is the market not surging?

The persisting headwinds

There are two main factors keeping the market down: weak global cues and a delay in a potential India-US trade deal.

The fundamentals of the market has improved significantly and the worst appears to be behind. Q2 earnings have been in line with expectations, and there are indications that earnings will improve further from Q3 onwards.

Valuations of large-caps have come down, and the intensity of foreign capital outflow has also subsided.

However, the delay in an India-US trade deal is infusing some caution in the market. Despite encouraging signs and US President Donald Trump himself saying that a trade deal between the two countries was imminent, there has still been no formal announcement.

There are also concerns about the details of the final deal, as the market will focus on whether India has compromised heavily on certain issues or gained new advantages.

Besides, there are concerns about a possible bubble in AI stocks in the mother market- Wall Street. Weak global sentiment is keeping the bulls in check back home.

However, some experts believe these concerns could be overblown.

"There are concerns being expressed about a possible bubble in AI stocks. However, I don’t believe there is a bubble, and comparisons to the year 2000 tech bubble are not justified," said Vijayakumar.

"Back then, Nasdaq’s PE was over 70, and many tech stocks were trading at PEs of 150–200. Today, Nasdaq’s PE is around 32, and AI companies are profitable — unlike the loss-making internet firms of the late 1990s. What we are seeing right now is simply profit-booking in AI names," said Vijayakumar.

The Indian stock market's outlook is positive, but experts expect only a modest rally over the next year due to global headwinds.

"India’s underperformance this year is unlikely to last. It is essential to recognise that, despite the significant underperformance of the Nifty 50 so far this year, it remains the best-performing index among the world's large markets over the last five-year period. The dip in corporate earnings in FY25 and the elevated valuations have been weighing on the market this year. This market construct is set to change for the better, going forward," said Vijayakumar.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.