Share markets brace for Bihar election verdict today; exit-poll comfort faces asymmetric risks

Indian equities head into Friday’s session on high alert as investors await the Bihar assembly election results -- a politically significant event that could sway market sentiment even though exit polls have projected a win for the ruling National Democratic Alliance (NDA).

Brokerages warned that the market reaction may be asymmetric. InCred Research said an NDA win is largely priced in, but a deviation from projections could prompt investors to price in a “coalition discount,” potentially triggering a 5-7 percent slide in benchmark indices Nifty and Sensex. The report said that razor-thin vote-share differences between the NDA and the Mahagathbandhan (MGB), and small swings among EBC and youth voters were capable of influencing more than 100 marginal seats.

Dhupesh Dhameja of SAMCO Securities said “a negative surprise in the Bihar elections outcome would signal weakness in markets.” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, added that with the exit polls already discounted, “there are no political triggers that can push the market significantly higher,” although the reverse might occur if the final numbers differ from the projections.

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Kotak Private Banking, quoted by Reuters, said the exit poll trends have reinforced expectations of policy continuity and government stability, supporting investor sentiment ahead of the count.

Winning and losing sectors post Bihar election results

InCred expects sector-specific reactions should the verdict diverge from the polls. Infrastructure, defence and PSU stocks -- direct beneficiaries of government capex -- could face temporary pressure if the ruling alliance slips. In contrast, consumption, regional and SME-linked plays might outperform in a politically fluid environment.

Despite the caution, sentiment entering Friday has been broadly constructive. “Sentiments have turned for the better with the exit polls indicating a decisive victory for the NDA in Bihar,” said Vijayakumar. Prashanth Tapse of Mehta Equities added that “bulls are in charge, buoyed by exit polls predicting an NDA landslide, optimism over a US-India trade deal, and hopes of an end to the US government shutdown.”

On Thursday, the Sensex closed almost unchanged at 84,478.67, while the Nifty ended flat at 25,879.15.