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Even before the results of Bihar Assembly elections, the stock market has become volatile. Sensex and Nifty witnessed a good rise on Wednesday after NDA’s victory was expected in the exit polls. But market experts believe that if the results differ from the exit poll estimates, then there could be a huge fall of 5 to 7 percent in Nifty. InCred Research, a brokerage firm, has said in a report that if the NDA government is not formed in Bihar and the opposition alliance comes to power, then investors can start selling in the market to avoid any kind of uncertainty. The brokerage firm has named it ‘coalition discount’. According to InCreed’s report, the defeat of the NDA alliance comprising BJP and JDU may increase the fear of political stability in the minds of investors. The report also warns that in such a situation, Sensex and Nifty may go down by 5 to 7 percent. However, the report also says that this decline may be for a short time, but for this it is important that the new government continues to maintain financial discipline and policies properly. According to the report, “In the medium and long term, it does not matter much who is in power, but it is important to see how serious the new government is about reforms and financial discipline.” Why did ‘Bihar elections’ become a political barometer? The report says that if there is a change of power in Bihar, then it can be considered a yardstick to understand the mood of the country’s politics. According to the exit poll, both the NDA and the Grand Alliance (MGB) are likely to get around 40% votes, which makes it clear that the contest is going to be very close. The report believes that if 3 to 6 percent of the extremely backward classes (EBCs) and young voters are inclined towards one side, then the results on more than 100 seats can change completely. How did the equation change with the entry of Jan Suraj? Report If it is to be believed, Prashant Kishor’s party ‘Jan Suraj’ can get around 10% vote share in Bihar elections. This could dent the NDA’s traditional vote bank, which includes people from the upper caste and non-Yadav backward classes. “When a stable government by a single major party is replaced by uncertainty about the alliance, investors immediately start questioning the country’s policies, fiscal discipline and the pace of reforms,” the report says. This may create an environment of “instability and uncertainty” in the market, as was seen after the 2004 and 2024 Lok Sabha elections. After the results of the 2024 Lok Sabha elections, the Sensex and Nifty fell by 6% in a single day. Which sectors will be affected by the Bihar election results? InCred says that the impact of the Bihar election results will not be the same on all sectors. Will happen. Infrastructure, defense and PSU (government companies) stocks may remain under pressure for some time as these sectors directly benefit from government spending and policies. However, consumption, regional and small-medium enterprises (SME) stocks, which are directly linked to the local economy, may also outperform in such a politically volatile environment.