The stage is set for the announcement of results of five states—Uttar Pradesh, Punjab, Uttarakhand, Manipur, and Goa — that went under polls recently. Counting votes for these states will begin tomorrow and the Election Commission will start sharing trends on its official website from 8 am.  

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As per most of the exit polls, the BJP is set to retain Uttar Pradesh, the Aam Aadmi Party (AAP) is expected to sweep Punjab, a hung assembly in Uttarakhand and Goa, while the saffron party is seen as taking edge over others in Manipur.  

Though results will be announced for all of these states, it is mainly the biggest state, UP, which is expected to have some bearings on the sentiment of the market. Analyst and market experts are of the view that a positive result for BJP would help gain market in the short-term, but it is geopolitical concerns, including ever-surging crude prices, that would dictate how market behaves going forward.  

Election results to have muted or short-term impact

A resounding win for BJP in Uttar Pradesh would give a booster to the stock markets, but it will only have a temporary impact, says Ravi Singh, vice President and Head of Research Share india.  

"The benchmark indices would celebrate a clean sweep for BJP in the crucial state and volatility will increase further. However, the overall market sentiments are very negative at present due to the ongoing war tension and high inflationary fear. The impact of the results may be muted or short lived," says Singh.  

He further says that there is a possibility of a longer disruption in the financial markets and it is most likely that the prevailing bearish trend would remain intact beyond the result day.

Parth Nyati, Founder, Tradingo, says focus of the market is on geopolitical issues and the outcome of election results could impact market for barely 1-2 days.  

"The UP election is considered important from the market perspective as it is a major state to define political situation and it could have caused a major swing in the market, if there was no big global event. We will see a positive reaction in the market if BJP comes in UP, but if the global situation persists, we will see sell on rising in the market," says Nyati.  

In case the BJP fails to retain power in UP, we may see a knee-jerk reaction in the market towards the 15500 level, but thereafter the direction of the market will depend on the global situation, he says.  
Assembly poll results may lead to more volatility 

Manoj Dalmia, founder and director, Proficient equities Private limited, is of the view that the results would stoke volatility further.  

"The result may bring up some volatility in the short term, as many companies might resort to an increase in fuel prices after the elections. This will lead to panic in markets causing them to fall with inflationary fear in the economy," said Manoj Dalmia, founder and director, Proficient equities Private limited.  

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, is of the view that exit polls forecast victory for the BJP in UP is positive from the market perspective. "The market in the short run, however, is likely to be swayed by the news from the war front, particularly crude prices," said Vijayakumar.  

How state election results impact individual stocks?

Speaking of how the results would impact individual stocks, Parth Nyati says there should not be much impact on individual stocks. We can see sentimental impact on Infra and Sugar stocks. If BJP comes back in the power, then Infra and sugar stocks may do well due to stability in policies and vice-versa,” he adds.  

Nifty, Sensex extend gains, jump 2% each

Meanwhile, the Indian markets extended gains for the second consecutive day as benchmarks Nifty and the Sensex gained more than 2% in the afternoon trade on Wednesday. The broader Nifty was above 16,300, while the Sensex gained nearly 1200 points.  

Earlier, snapping four days losing streak, the markets bounced back on Tuesday, a day after exit polls hinted at Chief Minister Yogi Adityanath-led party to retain UP.  

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)