How exit polls will direct the markets

Indian capital markets are trading on a cautious note in morning session. Nifty is hovering near 8900 levels ahead of exit polls of five state elections which are due on Thursday evening.

On Wednesday, the five states', viz., Goa, Punjab, Uttarakhand, Manipur and Uttar Pradesh (UP) Assembly elections concluded. After that research organisations have started churning out results and forecasting exit polls.

There is high anticipation that BJP may lead in the elections in these states. Most interestingly, UP, the most popular state, dubbed as a semi-final for central elections, will be a game changer. BJP has indeed come up with surprising results, winning in recent Maharashtra municipal elections with a clear majority.

For the BJP led government it is very important to conquer the state of UP as more seats from the State will lead to an increase in the count of BJP leaders in the Rajya Sabha, which will further help in smooth clearance of new reforms.

If a BJP win is not predicted in UP via the exit polls tonight, it may impact markets, and they will correct in coming days. Investors should be cautious over the upcoming week. The reforms agenda for the ruling party's remaining tenure, may get hampered, and will be a major set back for the nation as a whole as the current developmental phase will go under the weather.