Poll results may trigger knee-jerk reaction

Markets are gearing up for the outcome of Assembly elections in five states – Tamil Nadu, Kerala, West Bengal, Assam and Puducherry – scheduled for May 19. Though an unfavourable outcome for the Narendra Modi-led National Democratic Alliance (NDA) could trigger a knee-jerk reaction in the markets, analysts rule out a significant correction from the current levels.

LIVE BLOG: In 2 days, you will know the people's verdict: Jayalalithaa

Factors like the progress of monsoon, corporate earnings, inflation trajectory and the Reserve Bank of India (RBI)’s stance on policy rates will be key in determining market direction over the next few weeks, they say.

Also Read: Kerala assembly elections: Will BJP make inroads this time?

“The markets could see a negative knee-jerk reaction and come under pressure in the short-run in case the NDA were to lose in Assam, the only state where it hopes to win. Even then, I do not expect the Nifty50 index to slip below 7,500 levels. The upside, too, seems to be capped around 7,900 levels. Besides the election, the ongoing results season and the progress of the monsoon over the next few weeks will have a bearing on market direction,” says U R Bhat, managing director,Dalton Capital Advisors.

Also Read: Assam assembly polls: Will Himanta Biswa Sarma make BJP's luck in the state?

For Tirthankar Patnaik, India strategist at Japan-based Mizuho Bank, the progress of monsoons over the next few weeks is a bigger concern than State election outcomes. He, too, expects the Nifty50 to find support at 7,500 levels in case of unfavourable election outcome and sees the upside capped at 8,000.Read more.

NDA defeat in Bihar no setback to economy: Jaitley

The Finance Minister also attributed NDA's defeat in Bihar to 'huge index of opposition unity'

Attributing the NDA's defeat in Bihar assembly elections to 'huge index of opposition unity', Finance Minister Arun Jaitley today said it will not impact the economic reforms process.

"I don't see it as a setback to the economy... Structural reforms will continue. They should continue at a rapid pace," he said.

Read more from our special coverage on "BIHAR ELECTIONS"

• Old-timers, university junior recall Lalu Yadav, the man, the myth


• Bihar results setback for Centres GST agenda


• BJPs negative campaign gave Mahagathbandhan a landslide victory


• Rahul brought Nitish and Lalu together: RPN Singh


• Modi must take blame for Bihar defeat: Shiv Sena

1. Bihar Admitting that some irresponsible statements by certain BJP functionaries during the course of elections did change the narrative, Jaitley said the "index of opposition unity" was one of the biggest factors that led to the victory of the Mahagathbandhan in the Bihar assembly elections.

While the ruling NDA managed to get 58 seats (BJP 53) in the 243-member Bihar assembly, Mahagathbandhan got 178 seats.

The alliance comprises JD(U), RJD and Congress.

On whether Bihar election was a referendum on the policies of the Centre, Jaitley, in an interview to ET Now, said, "The word referendum is loosely used... Every election is not a referendum. A state election is not a referendum. You are not contesting on one issue."

He further said that the vote share of BJP has not come down and the victory of the Mahaghatbandhan was on account of different opposition forces coming together.

About reforms, Jaitley said government would continue them by taking executive actions and also in the Budget, which would be announced in February next year.

On the specific question of the pending Goods and Services Tax (GST) bill, he hoped that Bihar, which is a consuming state, would support the legislation.

"I don't see (Bihar election outcome) as a setback to the economy at all. If under Nitish Kumar, Bihar grows and grows well, we have already announced economic package for the state, certainly we are going to help.

"Our commitment is the states which need to develop more we have to help them more," Jaitley said.         


Article Source: Business standard