What NDA's win in Bihar elections 2025 means for markets, politics, economy

Bihar election results 2025: Analysts believe the result reaffirms the NDA's dominance in Indian politics, and should provide a sentiment boost to equities.

What does the NDA win in Bihar mean for stock markets?

 

National Democratic Alliance's (NDA's) "historic" win in Bihar is set to boost the markets’ sentiment in the near-term, analysts said on Monday.

 

The unprecedented win in the Bihar elections 2025, surpassing Exit Poll predictions, comes at a time when the markets were digesting other enabling factors, such as a cavalry of reforms and growth stimulative measures from the Reserve Bank of India (RBI) and the Government of India (GoI).

 

A confluence of these, analysts believe, could create a strong blend for a likely stable uptrend for Indian equities in the months ahead.

 

On the bourses, the BSE Sensex index added 414 points (0.4 per cent) in the intraday trade, while the Nifty50 gained 113 points (0.4 per cent).

 

Bihar election results 2025: Key takeaways

• The NDA made a clean sweep with 202 seat wins in the Bihar assembly elections vs 122 seats in the previous election. 
• There was a clear shift in seats from the RJD to the Nitish Kumar-led JD(U), with a gain of 42 seats, while the BJP gained 15 seats at the cost of the Congress (-13 seats) vs the previous election. 
• The highest turnout (71.6 per cent) among women played a crucial role in this election, as it exceeded male turnout by ~9 percentage points. 
• The recently launched "Mukhyamantri Mahila Rozgar Yojana" wherein ₹10,000 was transferred to one woman per family played its role in increasing the turnout among women.

 

Bihar elections 2025: Results analysis 

 

What does NDA's win mean for Indian politics?

 

According to analysts at JM Financial Institutional Equities, the decisive NDA mandate in Bihar, and the magnitude of shift in votes from the opposition parties (RJD and Congress) sends a clear signal of the political appeal of the BJP and its allies.

 

"We believe that with 85 seats, the JDU is currently in a commanding position in the alliance, which will provide it greater negotiating power at the Centre," it said.

 

Notably, Bihar has traditionally been an epicenter for identity- and caste-based politics, and the opposition Mahagathbandhan (MGB) did attempt to infuse its poll agenda with a similar narrative, in order to capitalise on the conventional political undercurrents.

 

"However, with a major vote and seat swing away from MGB, it is clear that Bihar’s electorate is aligning its aspirations toward an economically progressive model and yearns to reap the benefits from the development and economic growth model that a double-engine governance setup offers," said Motilal Oswal analysts.  CATCH STOCK MARKET LIVE UPDATES TODAY

What does the NDA (JDU and BJP) win in Bihar means for the stock markets?

Analysts believe the result reaffirms the NDA’s dominance in Indian politics, and should provide a sentiment boost to equities.  The results, they said, underscore continuity in the central government’s ability to stay on course with its resolute policymaking stance and provide flexibility to attune policies in line with the economic needs of the hour, aiding risk assets.

 

As per Motilal Oswal Financial Services, the Bihar assembly results 2025 carry some tectonic socio-economic and political repercussions for its population and economy, which will play out in the long term.

 

"In the short-term, the market will see it as a good policy and sentiment booster, affording the ruling NDA coalition to operate with greater freedom and flexibility to carry out growth-positive agendas," it said in a report.

 

The result, the brokerage said, further strengthens the ‘double engine’ governance narrative, where both the Center and respective state governments, being part of NDA, would work in tandem and not at cross-purposes -- which tends to be growth positive.

 

Those at JM Financial expect the markets to react positively to the victory, considering that it will add stability to the coalition at the Centre.

What Bihar election results 2025 mean for Indian economy?

According to market pundits, a clean sweep by the NDA in Bihar highlights that the "freebie economics" is still relevant as an electoral strategy.

 

Despite Bihar already facing considerable fiscal pressure, the major populist schemes announced pre-elections amount to nearly ₹40,000 crore or 4 per cent of the state’s GDP for FY26, which is more than the state’s capex outlay, estimates Emkay Global Financial Services.

 

"With even ‘good’ states like Maharashtra and Odisha catching the freebie bug (and seeing their fiscal positions worsen), Bihar is just one more state in an increasingly popular trend; with elections in Tamil Nadu, Kerala, and West Bengal in the next year, this race to the bottom will continue," the brokerage noted.

 

As a result, the 3 per cent fiscal deficit-to-GDP ratio ceiling for states is now the floor, with freebies adding to existing fiscal pressure, it added.

 

The brokerage’s calculations suggest that Maharashtra’s FD/GDP rose by 40bps in the last year after the 'Ladki Bahin' scheme was introduced, while Odisha’s rose by 100bps, with its FY26 budgeted FD/GDP now over 3 per cent. The same was 1.7 per cent in FY24.

 

"Bihar’s fiscal position is far more dire. Its FD/GDP was 6 per cent in FY25, and it has budgeted 3 per cent for FY26 on the back of a scarcely believable 22 per cent nominal GDP growth assumption. Data until August for FY26, however, shows that its fiscal deficit is already 27 per cent higher than the full-year figure," Emkay Global noted.

 

Bihar, it added, does not have a lot of own tax revenue - central transfers (tax devolution + grants) comprised over 70 per cent of its total revenue in FY25P, and so the rising fiscal burden of these schemes will cause further strain on its already stretched fiscal position (even as the Centre may finance its deficit via loans).