Sniffing a win for the Bharatiya Janata Party (BJP) in the crucial state elections in Maharashtra and Haryana, the bulls took the stage during the early hours of trade on Tuesday. Investors started the trading session with much gusto, as the equity markets opened in the green with Sensex and Nifty up 245 and 62 points respectively at 9.25 am. But the markets lost steam by the end of the day, closing flat with the Sensex and the Nifty in the red, down 38 and 22 points, respectively. The Nifty bank index was the biggest drag, down 1.19%.

Early vote count suggests a comfortable win for the BJP in Maharashtra, but the BJP found itself fighting a close battle against the Congress in Haryana. Maharashtra and Haryana are major revenue earners for the government’s coffers and also hold strategic importance. The early optimism stems from the focus on reforms in the winter session to spur growth. The key reforms to be taken up in the winter session include the land acquisition and e-commerce regulation bill.

Apart from the assembly election results in two states, 87 companies put out their earnings report card for the second quarter. These companies include index heavyweights such as Maruti Suzuki India, ITC, IndiGo, and Bandhan Bank. The markets remained volatile in anticipation of a mixed bag of news flow coming from lukewarm corporate earnings, and the BJP-Congress battle in Haryana.

Nomura in a report dated October 24 says that “relative to the exit polls, the state election results are a disappointment for the BJP”. “The BJP’s under-performance in rural constituencies is reminiscent of the struggle it has been facing in multiple state elections since 2018, where adverse terms of trade have dented rural incomes. On the policy front, these elections should not have a material impact, although it could push the government to hasten payment to farmers under the existing PM Kisan scheme,” the report says.

Maruti’s 39% y-o-y decline in the second quarter net profit dampened spirits, but the bigger blow was the Supreme Court’s ruling against telecom companies in the adjusted gross revenue (AGR) issue. The SC decision, which upholds the definition of AGR formulated by the Department of Telecom, means telecom firms will have to pay ₹92,000 crore in AGR besides penalties and interest to the DoT. After the SC order, the Vodafone Idea stock, whose dues totalled ₹19,823.71 crore, declined 17.5% to ₹4.66.

“This decision has come at a time when the sector is facing severe financial stress and may further weaken the viability of the sector as a whole. Of the 15 old operators impacted by the order, only two private sector operators remain in service today. The Government must review the impact of this decision and find suitable ways to mitigate the financial burden on the already stressed industry," Bharti Airtel said.

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