Sensex slips below 26,000-mark, down over 400 points on BJP’s massive defeat in Bihar polls
MUMBAI: Stunned by the margin of the BJP-led NDA’s crushing defeat in the Bihar assembly elections, the Sensex opened over 2% or 600 points lower, to drop to below the psychologically important 26,000-mark in early trades on Monday. All of the 30 Sensex constituents are in the red. If the index closes lower on Monday, it would be its 10th session of losses over the last 11 sessions.
The Sensex began a slight recovery a little after it opened, with the index moving to 25,831, down 440 points, or 1.7%, at 09:30am. It will become clearer over the next few hours how European and US fund managers react to the Bihar results, dealers said, although not many expect a further slide from current levels.
In the run up to the Bihar poll results, Dalal Street had already discounted a loss for the BJP, so while the defeat was not totally surprising, the margin of the NDA’s defeat was, market players said. Most analysts expected a close finish. However, the JD(U)-RJD combine secured a mandate that gave it, along with the Congress, an absolute majority in the Bihar assembly.
“Bihar’s election result is a surprisingly decisive mandate in favour of the Grand Alliance (GA) comprising the JDU, RJD and Congress,” said Jay Shankar, chief economist, Religare Capital Markets. “The GA’s landslide victory came as a surprise (178 seats vs 58 for NDA). Apart from scoring over the NDA on issues such as a credible CM face, almost no anti-incumbency against Nitish Kumar, a pro-reservation image and a high degree of vote transfer amongst alliance partners, the GA’s final victory was likely led by its popularity among women, youth and EBC voters,” he wrote in a note.
According to Shankar, the Bihar poll results can have two likely effects on the NDA government’s economic reform agenda. “The first is that the government speeds up the pace of action on the ground to catch up with its own policy intent and announcements. The government may also improve floor management in Parliament, especially in the Upper House (Rajya Sabha) where it is anyway unlikely to have a simple majority until 2018 at least. The Goods and Services Tax Bill and some other important pending reforms may be put on the backburner for the time being and the focus may shift to reform progress in economic spheres that do not require legislative process,” Religare’s note said.
Read full article: The Times of India
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