The Bihar Election Results outcome on are important from both political and Stock Market perceptive.
No doubt it will be an acid test for our beloved PM Shri Narendra Modiji as Crucial reforms, which can aid economic growth, are still missing due to lack of NDA strength in Rajya Sabha will get a Major Push GST, land reform bill etc. So lets analyze results from both technical and political prospective .
How Market reacts to Election Results.
While there is lot of media attention given to Bihar Election results but as we all know Stock Market is an animal which cannot be tamed and predicted but as traders we trade on probabilities.
Let me bring attention to readers How stock Markets have reacted to past State Election Results
There were 2 Major State Election which happened in past 2 years
- The results of elections in five states — Chhattisgarh, Delhi, Madhya Pradesh, Mizoram and Rajasthan — was be declared 8 December Click here to Read more
BJP won 3 state election with absolute majority Chhattisgarh,Madhya Pradesh and Rajasthan. Delhi BJP was the largest party, From Layman eyes this was very positive results and Stock Market should have rallied but the result was Nifty made top @6415 on 09 Dec and kept falling till 6130 a fall of 5% as shown in below chart.
2. The Result of Delhi Election which was declared on 10 Feb 2015 where BJP lost election,From Layman eyes this was very negative results and Stock Market should have corrected but the result was Nifty made bottom @8471 on 10 Feb 2015 and kept rallying till 8913 a rise of 5% as shown in below chart.
So no point in going by election results and what media and Blue channels experts will discuss and advise what more important is to understand price action on Monday 09 November to understand next “big move” which can come as we have seen market generally rally or correct for 3-5%.
How important is Bihar election for reforms?
Bihar being a mineral rich state, so If BJP wins state election a common party ruling at the centre and state would help to facilitate coordination. A lot of money (Rs 165,000 crore) has already been allocated for various infra projects including roads by the government earlier and for successful fruition, the same government phenomenon would be effective.
Bihar today comes in the lowest grade of the ease of doing business in states report released sometime back in the ‘jumpstart needed category’ with a score of 16.4% compared with 71.1% for Gujarat thus ranking 21 out of 32 states and UTs.
A victory for the NDA would also help the government in retaining fiscal prudence . It may be recollected that the government for some reason had created an impression that it would be less inclined towards freebies and subsidies and hence was seen as being against social spending.
A loss in Bihar and its ramifications for the NDA would perforce compel higher spending on such programmes which can pressurise the deficit.We have Important state election coming in Tamil Nadu, West Bengal and Keral where NDA has no presence so NDA might need to dole out subsidies so as not to be seen as Anti People.
If BJP fails to win the election, the reform process will not take a back seat as a win in the elections can at best change the number of seats in the Rajya Sabha by two.
Readers comments are welcome
Analysis must be appreciated. Market activity tell but not tomorrow. But next week
I think either way the market goes lower. If the NDA somehow wins it may produce a short term rally which wont sustain. I think the more important issue to consider is the US Jobs report on Friday, which may confirm a fed hike in December which would be bad for emerging markets as a whole.
Those who are making Fun of our Hon’ble PM Shri Narendra Modi must understand that it is not an easy task to effectively govern a country of One Billion. Give him time to prove his governance. Rome was not built in a day. Mess of last 10 Years of previous govt. cannot be cleared in a year or two years. We are all Indians who want INDIA to grow to make life of ordinary Indians especially poor and downtrodden, viable to live with dignity.
PM Narendra Modi is a highly gifted personality. Nobody should be allowed to cast aspersions at him even by mistake. I request the author of this great learning site to filter such names for ever.
Dear All what ever the election result may be but the stock market reacts majorily for earnings which are not that great
NDA to stay in power till 2029 and Nifty in bull trend till 2029 as per major time and gann analysis
Election Results will have a temporary bearing on the stock market and later on the market seems to be sliding down.And it appears to remain short for medium term.
Very good analysis…
One reason for this can be is that most of the price action in terms of reaction happens a few days earlier basis the exit poll data.. over time the accuracy of exit polls have improved. If not accuracy in terms of seats but at least the trend. I just checked for the Delhi elections. Exit polls came on 7th and all of them predicted an AAP victory. On the 9th (Monday) the Nifty lost 135 pts, or 2%. on the 10th when the results actually came, the same was already discounted. May be we can see some fireworks on 6th itself ( Friday)
I feel it’s just profit booking by Institutional investors. The media is unnecessarily broadcasting that the markets are nervous before the Bihar poll outcome.
Beloved PM ??? I know that he loves camera.
Anyways good article. 🙂
We all Know he does hard work for country and we should respect him instead of making fun.
Dear ,as modiji is working hard for our country and citizens ,u too r helping us with ur hard work and analysis,keep up the good work and filter the clutter of those who ridicule our p.m,jus lik modiji ignores noise.thx god bless
I must say you guys are sick who keeps blaming PM from birth to death. But here is a person gifted by God to us after Swami Vivekananda. If you see history of India, you will see a great soul has taken birth almost every 100 year and served the nation.
Sick sekular will always behave like this.
Hi brahmesh,
i have been a reader of your column for long and sincerely appreciate the methods and clarity you bring to the analysis.
This was again a very well analysed post with data and historical trends.
Just wanted to point out one mistake,though it has no bearing on the analysis done by you, but for the sake of correctness, Bihar now no longer is very rich in mineals ( jharkhand is rich in minerals). It is blessed with rich fertile land for agriculture.
thanks
Thanks for your Input
Bhai Bramesh, In recent weeks/days I have not seen a more mature, balanced poll-market analysis than this one by you. Most commentators seem to be getting carried away by a lot of political noise (just like market noise) that increases as a byproduct of campaigning by various parties and unprofessional activities of a section of journalists. I say that from practical experience.
So the conclusion that can be drawn from this analysis is:
1) Election results can produce a swing of 5% in either direction, REGARDLESS of whether the results are perceived to be Central govt. friendly or not.
2) Govt. has to concentrate on reforms past elections, whether results are friendly or not. Now this can be considered market positive.