Despite the political buzz, the market reaction is expected to be muted, analysts say, because most of the news has already been priced in. The Gift Nifty, which serves as an early indicator of the Indian market, traded flat.According to Abhinav Tiwari, research analyst at Bonanza, Bihar’s results are unlikely to cause major swings in the market. “Most investors have already priced in an NDA victory. Markets are currently more influenced by global and national economic trends than by state-level outcomes,” he said.
“As polls suggest that the NDA will remain in power, the outcome would largely indicate continuity and stability, keeping market sentiment stable,” he said.
Tiwari added that only a surprise outcome, such as a small NDA lead or an unexpected loss, could trigger short-term volatility. “If the outcome is unexpectedly close, it could make investors momentarily nervous. There could be some movement in stocks linked to Bihar, especially in sectors like consumer goods, infrastructure and local industries,” he said. “But a stable government would guarantee continuity of policies and public projects, and that is what the market prefers.” For investors, this means the focus is likely to remain on macroeconomic indicators and global signals rather than state election outcomes. Analysts expect broader market sentiment to remain dependent on corporate earnings, foreign inflows and US interest rate trends. Siddhartha Khemka, head of research at Motilal Oswal, said that with the second quarter earnings season almost over, markets will now turn their attention to global developments and trade-related updates.
“The second quarter earnings season is expected to end on a positive note, supported by better-than-expected performance from the broader market,” he said. “The near-term path will depend on the ongoing earnings season and the progress of US-India trade negotiations. Any constructive developments on the trade front could strengthen investor sentiment and support overall market momentum.”
So far this year, the Nifty has underperformed against major global markets, largely due to FII outflows. The index has consolidated within a narrow range in recent months as investors focused on macro data including inflation trends, earnings and the rupee’s movement.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of Economic Times)
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