New Delhi: Dalal Street is surely going to be rattled by the man who will control Delhi. The stock market is expected to open weak on Monday after most exit polls on Saturday predicted an AAP win. After exit polls gave AAP 41 seats, BJP 27 and Congress 2, the BSE's mid-cap index fell 1.1%, the small-cap index declined 1.8% while the benchmark Sensex dropped 0.5%
Nirmal Jain, chairman of India Infoline was quoted by ET saying, "There might be a small correction because the markets have factored in a result in line with exit polls, though the margin for AAP in exit polls is considerably higher".
Strong US job data and a deepening crisis in the Eurozone mat spark a selloff amid indication of victory for Aam Aadmi Party in Delhi elections. Some investors' worry that a victory for Arvind Kejriwal-led AAP in Delhi would make it tougher for Prime Minister Narendra Modi to push through reforms — mainly in the areas of mining and labour — considered crucial for the speedy recovery of business sentiment and the economy.
Analysts said many traders had built sizeable bullish positions in the run-up to the Budget later this month but few expected the Delhi election results to tilt in favour of AAP. The results of the Delhi polls will be declared on Tuesday.
Besides, stock market participants would take cues from a raft of macro economic data this week, third quarter results from blue-chips like SBI, ONGC and CIL, market experts added.
"We think the market is likely to see a correction of around 5% over next two months on account of supply of paper, rich valuations and weak earnings. A loss in Delhi polls for BJP could further provide an excuse for the correction," said Jyotivardhan Jaipuria, head of research, Bank of America Merrill Lynch.
As per analysts, BJP's performance in Delhi could have a bearing on party's prospect in the upcoming elections in Bihar and West Bengal.
