What Dalal Street Made Of State Election Results
A pedestrian passes by Bombay Stock Exchange building at Dalal Street in Mumbai. (Photographer: Anirudh Saligrama/ BloombergQuint)

What Dalal Street Made Of State Election Results

Indian equity benchmarks recovered after a steep decline in morning trade as markets shrugged off the surprise exit of Urjit Patel as the central bank governor and Prime Minister Narendra Modi’s Bharatiya Janata Party’s loss in at least two of the three key states where it was in power.

The S&P BSE Sensex Index swung over 750 points from its day’s low and closed at 35,150 and the NSE Nifty 50 Index closed 0.6 percent higher at 10,549.

The state elections trends show local issues were more at play rather than national, Vallabh Bhansali, chairman of Enam Group, told BloombergQuint in in interaction. “Most of the exit polls have not worked out except Rajasthan where the Congress did better but the BJP didn’t do that badly either. “The market will soon become comfortable that 2019 is still an open debate as there is no anti-wave or a pro-wave and therefore performance should matter.”

The Congress was close to the half-way mark in the 200-member Rajasthan assembly, according to wins and leads on the Election Commission’s website as of 6:45 p.m. The party wiped out the BJP in Chhattisgarh and was neck-and-neck with its main rival in Madhya Pradesh.

Here’s what other experts had to say about state elections results:

Not A Verdict For Entire Country, Says Mizuho Bank

The state assembly elections results is a sort of a guidance for some parts of India and is not a verdict for the entire country, Mizuho Bank’s strategist Tirthankar Patnaik said.

“We should not see any change in the governance at the centre as there is a difference in voter calculus between the state and the general elections and a large part of India has not been represented in the state elections,” Patnaik told BloombergQuint in an interaction. He suggested investors enter with a two- to three-year horizon.

BJP Loss Will Add To Uncertainty: BofA-ML

The markets would witness an increase in uncertainty dramatically if the state elections are not in the favour of BJP, Rohit Garg, director of Asia forex and rates at Bank of America Merrill Lynch, told BloombergQuint in an interaction. Uncertainty will ease if the results go in BJP’s favour, he said.

Investors To Assess BJP’s Strategy For General Election: Alastair Newton

The BJP’s strategy for the upcoming general election would weigh on the investor sentiment, Alastair Newton, co-founder and director at Alavan Business Advisory, said. “The general election is five months away and the BJP has to do lot of serious thinking to do for securing a second consecutive term,” Newton told BloombergQuint. “This is bound to have an impact on the investor sentiment.”

“Investors are not being perturbed by elections results and Urjit Patel’s resignation. They are probably expecting that there is now going to be some sort of a monetary stimulus from the RBI and that is going to be good for Indian stock valuations,” he said.

Investors Will Assess Political Outcome Over Earnings: Envision Capital’s Nilesh Shah

The investors are currently focusing on the political outcome over the corporate earnings, Nilesh Shah, managing director and chief executive officer at Envision Capital, said. This would lead to some uncertainty and therefore investors would hold back until there is a clarity, he told BloombergQuint.

“While the current scenario could lead to lower market levels, we believe that the fundamentals of corporate India are likely to improve and therefore the downtrend would provide an attractive value for long-term investors,” Shah said.

He is bullish on India with a long-term view due to falling commodity and crude oil prices, lower consumer inflation and the benefits of goods and services tax in the medium to long term.

Here’s what some other brokerages had to say:


  • NDA should win 245-280 seats in 2019, enough for Modi to retain power.
  • SP-BSP combine in the state of Uttar Pradesh could be a big challenge for the BJP.
  • Key worry for markets would be if the domestic investors start to reduce new investments.
  • State election manifesto shows competitive populism which could aid consumption but impact capex recovery.

Credit Suisse

  • No conclusive evidence determining the next ruling party at the centre.
  • Loss in Chhattisgarh was a big negative surprise.
  • Political takeaway could be farm stress must be addressed.
  • Results do not drive any visible change in market directions.


  • State assembly elections not positive for BJP; Market focus to shift towards general election 2019.
  • BJP coming back in 2019 is being priced in; Market evaluating various outcome possibilities.
  • Market risk-reward remains unattractive as it continues to trade expensively.

Morgan Stanley

  • First indicators of how things may pan out in May 2019.
  • Do not ignore results, but be cognisant of the complexities of politics.
  • Investors should watch for pre-poll alliances and the growth/inflation mix.
  • Maharashtra and Uttar Pradesh are likely to be crucial to the results in 2019.
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