NDA’s Bihar Victory to Boost Stock Markets: Analysts
The National Democratic Alliance’s decisive win in the Bihar assembly elections is expected to trigger a positive reaction in Indian stock markets, bringing political stability to the central coalition, according to market analysts.
Key Takeaways
- NDA’s strong Bihar mandate boosts investor confidence in political stability
- Benchmark indices gained over 1.5% during the week
- Retail inflation cooled sharply to 0.25% in October
Analyst Perspective
“Unlike the past trend, the actual results were in line with the exit polls but the mandate was stronger this time,” said JM Financial Institutional Securities in its latest note.
The recently launched women-centric cash transfer scheme significantly improved voter turnout, particularly among women, which reflected in the assembly results.
“The decisive mandate in Bihar in favour of the NDA and the magnitude of shift in votes from the opposition parties (RJD and Congress) sends a clear signal of the political appeal of the BJP and its allies,” the note added.
Market Performance
Indian equity markets ended the week strongly, with benchmark indices rising due to multiple positive factors including resolution of the US government shutdown, robust domestic fundamentals, better-than-expected Q2 earnings, and easing inflation.
The NDA’s Bihar election victory further strengthened investor confidence toward the week’s close, boosting overall risk appetite.
Markets showed a strong rebound during the week, closing firmly in positive territory after recent weakness. Both benchmark indices gained over one and a half percent, with the Nifty closing at 25,910.05 and the Sensex settling at 84,562.78.
Inflation Data Supports Rally
Investor sentiment received a significant boost from India’s retail inflation, which cooled sharply to 0.25% in October from 1.44% in September, supported by GST rate cuts and easing food prices. Wholesale inflation also entered negative territory at -1.21% in October, driven by softer crude oil and non-food article prices.
