Indian Stock markets are particularly sensitive to elections and elections in New Delhi present a challenge to Narendra Modi-led BJP. While Arvind Kejriwal has been limited to the national capital, his hold over his voters seems strong in New Delhi. Modi government has spent massive resources and many big leaders from BJP have campaigned in New Delhi. Stock markets would have loved if Modi government had stronger chances of winning the elections but majority of exit polls suggest that Kejriwal could retain the government in New Delhi.

Stock markets are waiting for results and we have witnessed range-bound movement in today’s trading session. While the markets won’t have major impact from the elections results in medium to long term, the short term impact could be seen on the day of results.

Narendra Modi has attacked Kejriwal on various issues but Aam Aadmi Party has managed to maintain its stronghold on the local voters. All the three major parties announced many freebies for voters but AAP seems to be leading the national capital.

If Kejriwal led AAP wins the elections in New Delhi, it will be a small setback for Modi. However, the macro-economic environment in India is still dependent on the policies announced by finance ministry. The Union budget disappointed investors but the markets recovered in few trading sessions. Indian markets are expected to remain strong over medium term.