Ahead of the results, the Nifty managed to close above 10,800 levels for the fourth consecutive day in a row and any disappointment at current levels could result in a kneejerk reaction on D-Street which could take Nifty 50 towards 10,600 and lower.
The D-Street is factoring a favourable Karnataka poll outcome on Tuesday, by a split exit poll result could cause a kneejerk reaction. Yet, the overall positive trend is likely to continue, suggest experts.
The Indian market is likely to open flat based on SGX Nifty trend which suggests a downtick of 15 points as on Sunday and is likely to consolidate until a clear trend emerges on Tuesday when results are scheduled to be declared.
Based on the exit polls, the un-decisiveness in the market should remain till the results and this should be reflected with a VIX in the range of 13%-15%. The market should open marginally positive on Monday and the overall positive trend is still expected to stay intact.
However, change in options data on Monday morning will indicate the true market expectations. Important support in Nifty is placed at 10,500-10,600 and with this as a stop loss, upside potential is open for 11,200.
For instance, one poll gives the Congress 87 to 99 seats while another predicts 106 to 118, indicating the possibility of securing a simple majority.
Similarly, with BJP, one agency forecasts 79 to 90 seats while another offers it 90 to 114, which means the party has a chance of crossing the halfway mark. In the case of JD (S), the numbers swing between 22 and 40.
Of the six polls available, four gave BJP the lead while two put Congress ahead. One of the four polls saw the saffron party likely to be the largest in the assembly, the Times Now-Today's Chanakya poll, had a median forecast of 120 seats for BJP, out of the 222 for which counting will be held on Tuesday.
Another, poll by CVoter for ABP News, predicted the BJP squeezing through to a majority with 112 seats. The India Today-Axis My India poll had a median forecast of 112 for Congress, just enough to cross the halfway mark in the truncated house.
Ahead of the results, Nifty managed to close above 10,800 levels for the fourth consecutive day in a row and any disappointment at current levels could result in a kneejerk reaction on D-Street which could take Nifty50 towards 10,600 and lower.
The Nifty50 witnessed a breakout above 10,785 on Friday which has now opened room for further upside until 10,900. However, if the BJP fails to attain a clear majority in the Karnataka election, a slip to 10,680 is possible.
"Karnataka election outcome would be the major trigger for the market in the next week. The market has already discounted the positive side of the election outcome in prices. In case of any negative surprise, we may see corrective action taking Nifty to the levels of 10550-10400 over coming weeks.
As many as 78 percent of the poll participants feel that if BJP fails to get a majority in Karnataka, it could result in a kneejerk reaction on D-Street which may pull the index below 10,680 and further towards 10,600 is possible.
For the Modi brigade, a victory here will help get BJP a pan-India presence. Karnataka is also BJP’s best bet to gain a foothold in the south.
And, if Congress manages to gain a foothold in Karnataka, it will not only be disappointing for the Street but have wider repercussions for national elections.
A close call, as many as 40 percent of the poll participants feel that if Congress takes lead in Karnataka elections would clearly mean that the popularity of the Modi govt. has come down and chances of Modi 2.0 becomes less likely.
However, 30 percent feel that it just means that popularity of the Modi government has come down and would not have any bearing on 2019 general elections.
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