Markets will gyrate to the tunes of the Bihar elections Markets will
Essence of the Week
Nov 09, 2015 | Source: AxisDirect
Markets will gyrate to the tunes of the election results in Bihar and musings from the Fed over the timing of the impending interest rate hike. Most Exit Polls gave an edge to Nitish Kumar’s grand alliance in Bihar in this high stakes contest. The results on Nov 8th would shape business expectations about policy and the margin of win/loss would be critical in shaping sentiments.
A loss for NDA may be a dampener for markets and may provide a template for the Opposition to halt the Modi wave in other states such as UP. Moreover, markets will fear that a defeat in Bihar may make the government risk-averse, encourage populism and shorttermism in policy with an eye on the next set of state elections.
An NDA win, though a positive for sentiments, will not necessarily impart any greater legislative boost in the near term with next round of RajyaSabha re-elections due only in Apr 2018.
Next week will be truncated because of Diwali festival and the new Samvat (new Hindu calendar year). While Indian market was euphoric last Diwali with a new government at helm, benchmark indices have actually given negative returns due to an obnoxious brew of global and domestic issues. Among sectors, Pharma continued its dream run giving the best returns and Metals, Oil & Gas, Power and Realty remained laggards.
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