Mumbai: The equity markets are expected to see a knee-jerk reaction on Monday after the ruling BJP-led National Democratic Alliance at the Centre suffered a humiliating defeat in the Bihar state assembly elections.
“The markets could witness an initial slide of two to three per cent,” said Hitesh Agarwal, head of research, Reliance Securities. Market participants believe that winning a state election is important for the NDA government as they don’t have a majority in Rajya Sabha, which is necessary to pass key reform bills like the GST and amendment to the Land Acquisition Bill. The Rajya Sabha members are elected by state legislatures. This according to market participants could slow down the pace of reforms in India.
More importantly, experts now believe that the emboldened united opposition parties could corner the government in the forthcoming winter session of Parliament especially when the Centre is being criticised for alleged growing intolerance in the country.
While the markets are expected to open down with a gap on Monday, Ambareesh Baliga, senior research analyst believes that fresh buying would emerge at lower levels. According to him, the markets have already lost close to 400 points in the last ten days as they had factored in a close fight between BJP-led NDA and JDU-led Grand Alliance. “Following the huge defeat of the BJP, markets will be under pressure for the next seven to 10 days,” he added.
“The markets are likely to witness a short-term set-back. With opposition parties getting united and gaining confidence post Bihar poll results, there is all likelihood of the winter session of Parliament getting disrupted,” said Rikesh Parikh, VP, market strategy at Motilal Oswal Securities.
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