Stock market investors are keenly awaiting the outcome of assembly elections in West Bengal, Kerala, Assam, Tamil Nadu and the Union Territory of Puducherry, with results scheduled for May 4. Ahead of the verdict, exit polls indicated a potential maiden win for the BJP in West Bengal, while a BJP-led alliance is expected to retain Assam.

JM Financial in a strategy note said like West Bengal, Kerala also appears to be ringing in a change, with the Congress-led United Democratic Front (UDF) likely to unseat the Left Democratic Front (LDF) that has ruled the state for the last 10 years. 

To JM Financial, the exit poll results suggest there was no uniform national trend at play, with outcomes driven by state-specific factors including welfare delivery, governance narratives and employment-related issues. 

"The only positive news, from the market perspective, is the exit polls indicating the ruling party consolidating its position. But this doesn’t provide any fundamental support to the market," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. 

This is because the analyst sees two headwinds, which can impact the market in the near-term. One is the Brent crude threatens to worsen India’s macros. He said the downside risk to growth and upside risk to inflation will rise if crude price remains elevated at this level. Besides, the results from AI majors in US and South Korea are better than expected. This, he said, might strengthen the ongoing AI trade for some more time. This means further portfolio outflows from India, impacting our markets. 

At 9.43 am, the BSE Sensex was trading at 76,742.24, down 754.12 points or 0.97 per cent. Nifty stood at 23,936.40, down 241.25 points or 1 per cent. Brent crude oil for July delivery was quoting at $113.73 per barrel, up 2.98 per cent. Asian markets were down up to 2 per cent. 

Data showed the voter turnout hit record highs, particularly in West Bengal, Tamil Nadu and Puducherry. From a domestic perspective, investor positioning is likely to remain cautious ahead of a long weekend, with markets closed tomorrow for Maharashtra Day. "The extended gap, combined with upcoming state election outcomes and potential geopolitical developments, increases overnight risk, especially in derivatives. This could limit aggressive positioning through the session," said Hariprasad K, SEBI-registered Research Analyst and Founder, Livelong Wealth.

JM Financial on exit polls
Exit polls suggested the BJP is set to win the assembly election in West Bengal with 159 seats in the 294-member assembly. The majority mark is 148. The TMC tally is projected at 127 seats and others are expected to secure 5 seats, JM Financial noted.

"The election in West Bengal were driven by welfare versus governance narratives, with TMC focusing on expansion of welfare schemes and rural outreach and the BJP highlighting governance reform, implementation of central schemes, and law and order concerns," JM said. The brokerage noted that the West Bengal’s voter turnout exceeded 90 per cent, with phase 1 witnessing 93 per cent turnout and phase 2 a total 92 per cent turnout.

JM Financial said exit polls suggest the DMK-led alliance is retain power in Tamil Nadu with 128 seats against a majority mark of 118 in the 234-member assembly. The AIADMK-led alliance is projected to win 75 seats and the newly launched party TVK 29 seats.

"The election in Tamil Nadu were driven by competing welfare and employment narratives, with DMK focusing on welfare continuity and growth, the AIADMK promising enhanced income support and subsidies, and TVK pledging jobs and encouraging entrepreneurship," it noted.

On Assam, JM Financial said the elections were driven by a mix of welfare expansion, job creation and identity-linked issues with the BJP focusing on employment generation, infrastructure and welfare delivery whereas the INC promised income support, social welfare and livelihood measures. 

Meanwhile, exit polls suggest the INC-led UDF may secure 77 seats in Kerala against a majority mark of 71. It may topple the ruling LDF, projected to get around 61 seats, in Kerala.

JM said the election in Kerala were driven by competing welfare and governance narratives with the LDF focusing on welfare expansion and social security. UDF, led by INC, talked about income support, public services and governance efficiency, it noted.