An exit poll by Today’s Chanakya posted on Twitter predicting 155 plus or minus 11 seats for the BJP-led National Democratic Alliance in Bihar out of the total 243 seats helped the SGX Nifty recover ground. Nifty Futures on the Singapore bourse, which was trading marginally in the red when other exit polls predicted a neck-and-neck race with advantage to the JDU-combine, was trading around 40 points higher at 8,010.

Big swings unlikely

With the exit polls showing a mixed trend, the stock market will not see any wild swings on Friday, say market participants. However, analysts feel that the outcome of the Bihar elections will not have a bearing on the Central Government’s growth agenda.

Vivek R Mishra, Asia Equity Strategist, Societe Generale, in a report said, “The impact of PM Modi’s election on share market performance has clearly worn off. The Nifty, booming both before and after the May 2014 General Election on expectations of reform, is in negative territory year-to-date, although still marginally ahead of other Asia EM indices. We do see further share price volatility ahead of the key upcoming Bihar State Elections (results) on November 8 though.”

BofA-ML’s view

“The result seems too close a call, but the impact should both (be) significant and short-lived. Bihar is important because it holds the fourth-highest number of seats in the Rajya Sabha, the Upper House of Parliament,” Mishra added.

A report by BofA-Merrill Lynch said, “The Bihar polls are perceived to influence the course of reforms. At the same time, they will not impact political stability at the Centre as PM Modi enjoys a majority in the Lok Sabha. It is another matter that we believe that lending rate cuts stimulating aggregate demand rather than reforms hold the key to a cyclical recovery.”

However, others attributed the revival of a bull market to earnings recovery by corporate India.

Mishra of Societe Generale in his report added “We believe we are about to see an earnings recovery unfold among Indian corporates and that this recovery will trigger the second phase of the bull market as monetary policy easing impacts margins and capacity utilisation improves.”

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