Stock market and assembly elections 2026: As the countdown begins for results of assembly elections in four state (West Bengal, Tamil Nadu, Assam and Kerala) and one Union Territory (Puducherry), which are set to be announced on Monday, May 04, 2026, stock market is all braced for heightened volatility, coupled with geopolitical concerns as well.

Broader market indices like BSE Sensex and Nifty50 index rose 5-6 per cent each in April 2026, while BSE midcap select index jumped more than 15 per cent, while BSE smallcap select index soared more than 18.25 per cent in the last one month as fear gauge India VIX dropped more than 26 per cent to slip below 18.5-level.

Exit polls across four states and one union territory suggest a stunning maiden electoral win for the BJP in West Bengal while incumbents are likely to comfortably retain power in Tamil Nadu, Assam and Puducherry. Like West Bengal, Kerala also appears to be ringing in a change, with the Congress-led UDF set to unseat the LDF, which has ruled the state for the last 10 years.

The 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. Voter turnout hit record highs, particularly in West Bengal, Tamil Nadu and Puducherry, said JM Financial Ltd in its report.

In West Bengal, competing welfare versus governance narratives dominated the election. While Tamil Nadu election was driven by competing welfare and employment narratives. In Assam, welfare expansion, job creation and identity-linked issues were the key issues that dominated the election. Voter turnout in these three states was 85-90 per cent, noted the brokerage firm.
 

Impact on stock markets and what should you do?

Investor sentiment will be influenced by domestic political developments, as the state election results will be announced on Monday, said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services. "In this backdrop, stock-specific action is likely to dominate, driven by earnings announcements," he adds.

If a growth oriented ruling party is elected it can have temporary positive sentimental impact and vice versa, said Sunny Agrawal, Head of Fundamental Research at SBI Securities. "Historically the impact of state election outcomes have been for a day or two and investors should rather focus on fundamentals and should be less inclined towards political outcomes for long term goals."

Elevated bond yields and cautious positioning ahead of key global developments and upcoming state election results kept investors on the sidelines, said Ajit Mishra, SVP of Research at Religare Broking. "Traders are advised to maintain a cautious stance, focus on risk management, and prefer sector-specific opportunities," he said.
 

View on Indian Rupee

Markets will watch state election outcomes and developments around US–Iran ceasefire talks, which remain key triggers for sentiment and crude direction, said Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities. "Near-term, support is seen around 95.45, while resistance is placed near 94.60, with volatility expected to remain elevated," he adds.