 "Markets feel Bihar shock waves")
The shock waves of the Bharatiya Janata Party's (BJP's) defeat in the Bihar Assembly elections were felt across domestic financial markets, with stocks, rupee and bonds ending at multi-week lows.
After the results of the five-phase election were declared on Sunday, concerns over whether or not Prime Minister Narendra Modi will now have the numbers in the Rajya Sabha to push through economic reforms triggered a sell-off by foreign investors.
Foreign institutional investors (FII) on Monday sold shares worth about Rs 860 crore, sending the rupee and the markets back to September levels. (FALLING NUMBERS)
The rupee fell the most since August to end at 66.45 against the dollar compared to its previous close of 65.76.
The Sensex dropped as much as 608 points on opening but managed to recover on the back of short covering. The 30-share index ended 143.84 points, or 0.55 per cent lower, at 26,121.4, lowest level since September 28. The yields on the benchmark 10-year government security ended at 7.73 from 7.69 on Friday.
The weakness in the global market on worries that the US Federal Reserve will increase rates next month also weighed on the markets and foreign flows.
"The election verdict holds significance for the markets because the process of initiating reforms by the government has slowed down considerably in the last few months, thanks to legislative logjam," said Sahil Kapoor, chief market strategist, Edelweiss Financial services.
The NDA's prospects in the Rajya Sabha, remain as bleak as ever where it has only 67 seats, against the United Progressive Alliance's 78. Bihar will be replacing five members to the Upper House soon, of which NDA is expected to get only one.
The entire Monsoon session earlier this year was a washout with the Opposition blocking legislative work in Rajya Sabha. With the loss in Bihar - and in Delhi earlier - NDA position has became more precarious. Now, it seems it may not get the majority in Rajya Sabha during the whole of Modi's term.
The brokerage expects the Nifty 50 index to trade between 7,500 and 8,300 over the next couple of months. The index on Monday closed at 7,915.2, down 39.1 points, or 0.49 per cent.
Even though the government is unable to push through some of the key legislative reforms it would strive to announce important non-legislative reforms to support to economy and the market, said experts.
