Market Correction on BJP's Bihar Loss to be Short-Lived: Brokerages

BSE Sensex and Nifty slumped over 2 per cent on Monday, reacting negatively to the Bihar Assembly election results in which the BJP-led National Democratic Alliance suffered a big defeat to Nitish Kumar-led Grand Alliance. The Sensex fell over 600 points and the Nifty fell below its crucial psychological level of 7,800 in early trade.

The big worry for investors is about economic reforms, which may get pushed back amid rising political opposition, traders said. However, some analysts contested the Street's view.

Here's what top brokerages say on impact of Bihar elections on stock markets:

Credit Suisse: Neelkanth Mishra, India equity strategist of Credit Suisse, said the market impact should be short-lived and the Street had already priced in the Grand Alliance's win in the elections. However, Mr Mishra added that the magnitude of victory was unexpected.

CLSA India: Mahesh Nandurkar, executive director of CLSA India, said that the economic realities on the ground don't change and any over-reaction to the election result is an opportunity to 'buy'.

Nomura India: Prabhat Awasthi, Managing Director at Nomura (India), said any correction in markets will be temporary and an opportunity to 'buy'. Mr Awasthi added that margin of victory in Bihar polls was a big surprise but he does not expect the election results to change the direction or pace of reforms.

Kotak Institutional Equities: Sanjeev Prasad, head of research at Kotak Institutional Equities, says that Bihar elections results will not have impact on economic reforms and markets are at reasonable valuations.  Buy markets require reform support and is likely to focus more on second quarter results, he added.