In the heart of Mumbai, the stock market plummeted amidst swirling anticipation of a resounding victory for the NDA, as indicated by the latest exit polls. Market insiders emphasized on Tuesday that despite this tumultuous ride, the narrative of India’s potential remains robust for the foreseeable future. Predictably, they foresee a continued rollercoaster for the markets this week, eagerly awaiting clarity on the BJP and NDA’s seat count to gauge power dynamics and pivotal portfolio distributions.

Dhiraj Relli, the Managing Director of HDFC Securities, shared with PTI his analysis, predicting that with around 240 seats for the BJP and under 300 for the broader NDA, Prime Minister Narendra Modi might find it challenging to push forward reforms in crucial areas like land, labor, and agriculture. These essential steps, he lamented, might take a backseat, although he reassured that such setbacks wouldn’t directly rattle the capital markets.

Looking ahead to the impending government formation, which is likely to be an NDA-led coalition, industry expert A Balasubramanian, Managing Director and Chief Executive of Aditya Birla Sun Life AMC, echoed similar sentiments. He highlighted the probability of a less vigorous pursuit of manifesto promises due to the evolving political landscape. The steep 5.74% decline witnessed in the benchmark on Tuesday, he noted, was merely a knee-jerk response post the euphoria fueled by the exit polls.

In agreement, Manish Jain, director of institutional business at Mirae Asset Capital Markets, underlined the significance of continuity in policies for investors, urging them to perceive short-term market fluctuations as opportunities rather than deterrents. However, Yashovardhan Khemka, Senior Manager, Research & Analytics at Abans Holdings, cautioned about potential policy paralysis and government uncertainty in the wake of a coalition government.

Market analysts are factoring in the associated risks, particularly the prospect of a tilt towards socialist policies, leading to market sell-offs. Amidst this anticipation, Suman Bannerjee, CIO at Hedonova, stressed the pivotal role of the new government’s economic policies, with indicators such as GDP growth, inflation, and global conditions shaping the market’s future trajectory.