NSE Nifty may see a correction of up to 15 per cent if a non-NDA government is formed at the Centre, a brokerage said Thursday.
Citing opinion polls and its field visits to Uttar Pradesh, West Bengal and Rajasthan, Swiss brokerage UBS Securities said that there is "no big wave visible either way with election activity perceptibly quieter than in 2014", and added that the ruling BJP may suffer a setback in UP and is likely to gain in WB.
It can be noted that UP had delivered 71 seats to BJP's kitty in 2014 general elections, while it could secure only two seats of the 42 in West Bengal.
It added that the positive impact of populist schemes is "not a given".
With only a week to go for the results, the note also discussed possible scenarios and how the market will react to it.
If a non-NDA government has to be formed, the NSE's benchmark Nifty will correct by 10-15 per cent, while NDA winning less than 250 seats in the 543-member House will lead to near term volatility till actual government formation.
However, if the BJP-led NDA wins over 250 seats, the Nifty could move up by 5 per cent to touch its recent peak, while BJP winning a single-handed majority could move the benchmark up by 5-10 per cent, it said.
Commenting on the exit polls, which will start coming on the evening of May 19 after the last vote is cast, it said such exercises have not been accurate for the last three national elections.
In 2004, the exit polls wrongly forecasted BJP-led NDA coalition winning again, while in 2009 they underestimated Congress-led UPA's seat share, it said.
"Markets will watch these results (of exit polls) closely though and there could be some impact," it noted.
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