That said, the election results may not severely impact the market direction. What will sway sentiment are the grim Covid numbers and any further restrictive policy decisions to control the second wave, analysts said.
Mamata Banerjee’s Trinamool Party bagged some 213 seats in West Bengal against 148 needed for a majority. BJP’s tally stood at 77. In Tamil Nadu, DMK bagged 133 seats against AIADMK’s 66. In Assam, BJP won 60 seats while INC came second with 29. Kerala saw CPI(M) winning 62 seats against 71 needed or a majority. In Puducherry, AINRC won 10 seats against 16 needed for the majority.
“Although the market will be disappointed with BJP’s inability to breach TMC’s citadel in West Bengal, it will take comfort in the fact that the BJP has been able to retain power in Assam by overcoming the oft-repeated assertion of its critics that it fares poorly in defending states where it is in power,” said independent analyst Ajay Bodke.
He said DMK’s close win in Tamil Nadu was the sole consolation for INC, even as AIADMK put up a spirited fight despite the lack of a charismatic leader and anti-incumbency.
The analyst said the impact of the wins by the TMC and DMK on the constitution of the Rajya Sabha will be watched closely, as “the NDA needs to command a majority there to pass crucial legislative bills to accelerate economic reforms and expand BJP’s nationalistic agenda in social and cultural spheres.”
Emkay Global said elections might be seen as a mild setback for the BJP compared with its stellar performance in West Bengal in 2019. “We reckon even as BJP vote share has reduced somewhat from its tally in the general election, it has indeed made strides in expanding its geographical reach and emerged as a strong opposition in the state, traditionally seen as a home turf of TMC and the Left,” it said.
Emkay said the election outcome did not surprise it and that market’s focus should now be back on the evolution of the Covid-II wave and policy responses, while policymakers’ focus will be squarely on minimising the economic and social costs.
“We also will keep an eye on the possible cabinet reshuffle ahead of the June parliamentary session, last reshuffle took place almost two years ago.
The next major set of state elections will be held early 2022, covering some of the big states such as UP and Punjab, while Gujarat will go to polls at the end of 2022.
