Analysts believe that a reduced majority or outright loss for the Bharatiya Janata Party (BJP) in the upcoming Haryana and Jammu & Kashmir (J&K) elections is unlikely to significantly impact the stock markets.
Currently, market concerns are broader, with major focus on the evolving geopolitical situation in West Asia and its potential effects on oil prices, the outcome of the upcoming U.S. presidential elections in November, and the forthcoming corporate earnings season in India. Additionally, the monetary policies of global central banks are also expected to be closely monitored.
However, a complete rout for the BJP in all state elections—starting with Haryana and J&K, followed by Maharashtra (with elections anticipated in November) and Delhi (likely in February)—could lead to a temporary knee-jerk reaction in the markets, analysts warn.
According to G. Chokkalingam, founder and head of research at Equinomics Research, the markets are already factoring in potential outcomes from the state elections based on past Lok Sabha results. He noted that, aside from Maharashtra, the other states hold fewer Lok Sabha seats, meaning their electoral outcomes would have a minimal effect on market movements. He emphasized that fluctuations in crude oil prices, driven by the ongoing geopolitical tensions in West Asia, are likely to be more influential on domestic market trends at this time.