How will the Stock Market react to the Bihar verdict?

How will the Stock Market react to the Bihar verdict?
How will the Stock Market react to the Bihar verdict?

New Delhi

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]Q[/dropcap]The BJP’s crushing defeat in Bihar might send shock waves across the investment community and lead to a crash in the stock market when it opens on Monday. The defeat is bound to inject an amount of uncertainty about the future course of economic reforms and keep the investors on tenterhooks unbtil the parliament session gets underway on November 22.

It’s not hidden from anyone that not only the Janata Dal (U) and RJD, but many regional parties, Congress and the Communists have serious differences with the BJP over the direction of the economic reforms. The defeat will mean that among other things the Modi government will have to bury the possible labour reform that would have given employers the right to hire and fire workers at will. The Modi government was under pressure to go for this radical labor policy reforms from international business community as precondition to take part in the Make In India campaign. Now that the BJP will face an energised opposition, it will be impossible for it to develop a political consensus on an issue where a majority of the trade unions are also bitterly opposed to it.

The passage of the Goods and Services Tax (GST) bill in its present format is also looking uncertain now, given the fact that the Congress and many other parties are opposed to several of its contentious provisions. If the Government dilutes the GST bill to appease the Opposition ranks, it will send a wrong signal to the investment community.

The stock market will also be worried because the Government has not been able to take steps to revive demand in any meaningful way. The results of third quarter for most of the companies have failed to infuse any degree of confidence even among the retail investors.

It is obvious that under the given circumstances, the stock market could see a major reaction on Monday. The government will have to take urgent steps to convince the international community that it will take the Opposition along and crush the `ultra right fringe’ elements on the mission to keep India as the most cherished investigation destination across the globe.

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