Nomura, a Japanese brokerage firm, believes, Of the 243 assembly constituencies in Bihar, the Grand Alliance (the incumbent JDU, RJD and Congress) currently holds 117 seats, while the BJP holds 84 seats. (AP)
With all eyes on upcoming event of Bihar election results, markets turned choppy on Friday but closed almost unchanged by the end.
Cautiousness inched higher in reaction to exit poll numbers, where majority expect close fight between NDA and the Nitish Kumar-led Mahagatbandhan. Sensex and Nifty closed 38.96 points and 1.15 points down at 26265.24 and 7954.30 on Friday.
The five-phase polling in the state of Bihar ended on November 6. Official results will be announced onNovember 8.
The coalition of local parties led by Chief Minister Nitish Kumar is expected to win 124 out of 243 seats in Bihar’s assembly, giving them a majority, according to a simple average of the exit polls calculated by Reuters.
Similarly, Nomura, a Japanese brokerage firm, believes, Of the 243 assembly constituencies in Bihar, the Grand Alliance (the incumbent JDU, RJD and Congress) currently holds 117 seats, while the BJP holds 84 seats.
“The Bihar polls are perceived to influence the course of reforms. At the same time, they will not impact political stability at the center as PM Modi enjoys a majority in the Lok Sabha. It is another matter that we believe that lending rate cuts stimulating demand rather than reforms hold the key to a cyclical recovery, ” according to Bank of America Merrill Lynch (BofA-ML).
According to BofA-ML, Bihar polls are important politically as they are the first test of the ruling BJP in the Hindi heartland after the May 2014 general elections. The BJP had then swept all four major states – Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh. In Bihar and Uttar Pradesh, the BJP’s stellar performance was partly attributed to the divisiveness of the opposition parties. In Bihar, two key local leaders, Nitish Kumar and Lalu Prasad Yadav, have now joined hands. It remains to be seen if PM Modi can still win in the state.
Jimeet Modi, chief executive officer, SAMCO Securities, said, “Domestic equity market will have a shy of relief on Monday as the election results will be out and discounted. Lower seat tally for ruling alliance in the centre can cause a knee jerk reaction and markets can open sharply lower potentially giving an opportunity to take a contrarian bet and go long on the markets.”
According to CLSA, If the BJP-led alliance loses the Bihar election, this will lead to more press hype that Modi’s honeymoon is over and that his reforms are failing.
Christopher Wood of CLSA said, “Investors should view this as short term noise and use any significant weakness as a buying opportunity even though it is also true that the current continuing earnings season has so far been relatively disappointing.”
“Irrespective of the election results markets can bounce sharply as India is the only high growth country, which has lagged behind in the current rally across international markets. Going forward the Government seems committed to the reforms and hopefully should succeed in getting the key bills like GST and Bankruptcy code passed. Market can remain volatile on Monday and hopefully will discount the electoral event and move forward with economic realities. Nifty ended the week down by 1.38 % to close at 7954.30,” said Jimeet Modi.
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