NDA’s sweeping victory in the is expected to provide a near-term boost to market sentiment, with analysts saying the decisive mandate reinforces policy continuity at the Centre at a time when domestic equities are already supported by favourable economic cues.
The ruling alliance delivered a landmark win, surpassing even the strongest Exit Poll estimates, securing 202 seats against 122 in the previous election. The outcome arrived as the markets were digesting a supportive mix of reforms, liquidity conditions and recent growth-oriented measures from the Reserve Bank of India (RBI) and the Government of India (GoI). Analysts believe this combination, along with political stability, strengthens the environment for a steady uptrend in Indian equities.
On Monday, benchmark indices ended higher as investors reacted to early election trends. The rose 335 points to close at 84,897.91, while the advanced 103.40 points to finish at 26,013.45.
Political signal and market interpretation
Brokerages noted that the decisive shift away from the RJD-Congress alliance underscored the continuing political strength of the BJP-led NDA. JM Financial Institutional Equities highlighted that the JDU’s 85-seat performance puts it in a stronger negotiating position within the coalition, an important signal for Centre-State coordination.
While Bihar has traditionally seen politics shaped by caste and identity lines, analysts pointed out that the voting pattern this time suggested a clear tilt toward an economic development narrative. Motilal Oswal analysts said the results reinforced the appeal of the “double-engine” governance model, where an aligned state and Centre could execute development programmes more efficiently.
Markets see near-term support
For equities, the Bihar mandate is being viewed primarily as a sentiment-positive event. Analysts said the outcome reduces political uncertainty and strengthens the market’s confidence in the continuity of central government policies, particularly around capex, push and reforms—key drivers that investors have been tracking closely.
Motilal Oswal Financial Services noted that while the broader political consequences will play out over time, the immediate takeaway for markets is the increased flexibility the ruling coalition now enjoys to pursue growth-supportive agendas.
JM Financial added that the victory reinforces stability at the Centre, a factor that risk assets typically reward.
Fiscal concerns remain a watchpoint
Brokerages, however, flagged the continuation of high-cost welfare schemes—an aspect that emerged as a key feature of the Bihar campaign. Emkay Global Financial Services estimated that pre-election populist announcements in the state amounted to nearly ₹40,000 crore, roughly 4 per cent of Bihar’s FY26 GDP, exceeding the state’s capex budget.
Emkay also noted that Maharashtra and Odisha had recently experienced similar fiscal strain due to populist schemes, with both states seeing their fiscal deficit-to-GDP ratios rise meaningfully.
For Bihar, the fiscal stress is more acute. The state reported a 6 per cent fiscal deficit-to-GDP ratio in FY25 and budgeted a sharp reduction to 3 per cent for FY26, based on an ambitious 22 per cent nominal GDP growth estimate. However, data up to August showed the deficit already 27 per cent higher than the full-year projection.
The brokerage added that Bihar’s heavy dependence on central transfers—accounting for more than 70 per cent of its FY25 revenue—limits its flexibility as welfare spending rises, even if the Centre steps in with additional financing support.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.