Pledging its support to big-ticket investments in Bihar following the Nitish Kumar-led Grand Alliance’s thumping victory, India Inc seeks renewed focus by Modi govt at the Centre on economic reforms; hopes Opposition would also extend a helping hand
New Delhi : BJP’s big setback in Bihar elections could be a “stumbling block” to the central government’s reform agenda, global giant Barclays said. According to the global brokerage firm, the Bihar election verdict could also lead to “weakness” in the stock market.
“We feel that today’s results – the BJP’s big defeat – could be a material sentiment dampener in Monday’s early trade as this might be perceived as an additional stumbling block to the central government’s reform agenda,” Barclays said in a research note.
Pledging its support to big-ticket investments in Bihar following the Nitish Kumar-led Grand Alliance’s thumping victory, India Inc sought a renewed focus by the Modi government at Centre on economic reforms.
Biocon’s Chairman and MD Kiran Mazumdar Shaw said that the Modi government should now focus on its economic agenda and hoped the Opposition would also extend a helping hand.
“With Bihar elections behind us, Modi govt can now give undivided attention to the economic agenda… Hope Opposition aligns with the government and the electorate,” she tweeted.
She further said the Congress also “needs course correction. Vitriolic rhetoric and opposing economic Bills is alienating the party from the electorate”.
Congratulating Chief Minister Nitish Kumar and his Grand Alliance, industry chamber Assocham said the industry looks forward to “a new beginning” in the state, which needs a renewed vigour for economic development.
It further said that with elections now out of the way, “the industry expects the Centre and the state to work together to pursue certain economic reforms like the Goods and Services tax so that the Indian economy is able to achieve higher growth for the benefit of all citizens”. In a statement, CII too committed to working with the new government in furthering the state’s development agenda.
D-Street jittery
The global brokerage firm further said that the strong employment data from the US, which was published after the Indian market closed on Friday, will likely weigh on markets on Monday as it has “materially increased the possibility of a Fed lift-off in December”.
“This may particularly weigh on the Indian rupee, as the USD strengthens, while local cues remain weak as well,” Barclays added.
The final verdict turned out to be way stronger than that in favour of the Mahagathbandhan (MGB, or the Grand Alliance) led by the incumbent Bihar Chief Minister, Nitish Kumar.
“Indian financial markets were cautious ahead of the election results, and a result against the BJP should lead to market weakness,” it added. Meanwhile, market analysts are anticipating a significant impact of the Bihar poll results on stock markets.
“We would expect 2-2.5 per cent correction tomorrow morning, but the markets should stabilise by the close,” Equities Equirus Securities Head Pankaj Sharma said, adding that there is not likely to be a knee-jerk reaction though because the possibility of the BJP not winning was partially priced in when the market corrected last week.
The domestic brokerage also believes that this verdict is a better outcome for the future of economic reforms if the BJP takes this as a lesson that only development could help them win.
“If they play the game like others and on others’ terms, they will lose. So, they would have to play to their strength for polls, which is positive agenda of development and governance,” Sharma added.
The Bihar Assembly election results showed Nitish Kumar-led Grand Alliance getting a huge majority after defeating the BJP-led National Democratic Alliance (NDA) in the politically important state.
