Dalal Street Cheers Bihar Exit Polls, US Trade Deal Progress; Nifty Tops 25,900 Mark

Investors flocked to Indian stock markets on Wednesday, pushing the Nifty 50 on the NSE above the 25,900 mark, up about 1% from Tuesday’s close. The BSE Sensex also rose around 1%, or 758 points, to reach 84,625 during intraday trade at 1:40 PM.

Analysts said expectations of a National Democratic Alliance (NDA) victory in Bihar and reports of an imminent India-US trade deal boosted sentiment on Dalal Street.

Among the Nifty 50 stocks, Adani Enterprises led the gainers’ pack with a 4.66% rise at 1:40 PM, followed by Tech Mahindra (3.47%), TCS (2.51%), Adani Ports (2.50%), and Bajaj Finserv (2.21%).

On the losing side, newly listed TMCV fell 3.55%, even after debuting with nearly 30% gains in the morning. Other laggards included Tata Steel, TMPC, BEL, and Shriram Finance.

In the broader market, the BSE MidCap index was up 0.50%, while the SmallCap index gained 0.74%. On the NSE, the Nifty Midcap Select rose 1.66% and the Nifty Smallcap 100 gained 0.84%. Sectorally, Nifty IT jumped 2.16%, Nifty Auto advanced 1.32%, and Nifty Oil & Gas rose 1.26%, while FMCG remained largely flat.

Key Factors Driving the Market

1. India-US Trade Deal Hopes

Investor sentiment improved after US President Donald Trump said Washington was close to finalising a trade agreement with India. “We’re getting close,” Trump told reporters at the White House, expressing optimism that the deal would mark a significant upgrade from previous arrangements.

Outlook Business reported on Tuesday that ongoing trade talks between India and the United States were progressing smoothly and could conclude soon without requiring another round of negotiations.

“We are waiting to hear back from the US,” a government official told Outlook Business, adding that the discussions were among the most comprehensive and WTO-compliant trade negotiations India had undertaken.

Following Washington’s 50% tariff hike on select Indian exports, New Delhi has been stepping up efforts to diversify its trade ties, fast-tracking free trade agreement (FTA) talks with economies such as New Zealand, the European Union, and the Gulf Cooperation Council (GCC).

2. Bihar Exit Polls

Markets also gained support from exit polls predicting a comfortable win for the ruling NDA in Bihar, boosting expectations of policy continuity and political stability.

“Sentiments have turned for the better with news of an India-US trade deal being finalised soon and exit polls indicating a decisive victory for the NDA in Bihar. This will strengthen the bulls but is not enough for a decisive breakout or sustained rally. Given current trends, FIIs are likely to sell again at higher levels. As long as the AI trade continues, a sustained reversal of FII money appears unlikely,” said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

However, some analysts warned that India’s equity markets could face volatility if the NDA fails to retain power in Bihar.

Analysts at InCred Equities noted that a centrist coalition led by JDU chief Nitish Kumar could trigger a 5–7% short-term correction in the Nifty index, echoing past sell-offs driven by political uncertainty. A small voter swing could cost the NDA up to 60 seats, unsettling investor confidence.

“The Bihar 2025 electoral numbers leave little margin for error — with vote shares nearly tied (NDA’s 32.8% vs Mahagathbandhan’s 32.7%). Even a 3–5% swing among key blocs like upper castes, NY-OBCs, or EBCs could flip 30–40 marginal seats. Jan Suraj’s ~10% vote share, drawn largely from NDA’s traditional upper-caste and NY-OBC base, cuts the alliance’s core support from ~39% to the mid-30s. Meanwhile, an EBC shift of just 4–5% towards MGB could translate into major seat gains across 120 constituencies,” the brokerage firm said in a note.

Markets may price in a short-term “coalition discount”, with Nifty correcting 5–7% on any sign of an NDA setback before stabilising once fiscal policy clarity emerges, the InCred analysts added.

3. Positive Global Market Cues

Global sentiment also brightened after the US Senate approved a bipartisan deal to end the country’s longest-ever government shutdown, easing investor concerns and reviving risk appetite.

“Bulls are in charge, buoyed by exit polls in Bihar predicting an NDA landslide, optimism over a US-India trade deal, and hopes of an end to the US government shutdown,” said Prashanth Tapse, Senior Vice President (Research) at Mehta Equities told Reuters.

Asian markets traded mixed — South Korea’s Kospi and Hong Kong’s Hang Seng gained, while Japan’s Nikkei 225 and China’s Shanghai Composite slipped. Overnight gains on Wall Street also lent support to domestic equities.

On Tuesday, benchmark indices saw a volatile session before closing higher — the Nifty rose 121 points and the Sensex gained 336 points. The defence index outperformed, advancing 2.45%.

“We believe current market conditions remain volatile; therefore, level-based trading is ideal for day traders. Levels of 25,625/83,500 and 25,500/83,300 will act as key supports, while 25,800–25,900/84,000–84,300 could serve as immediate resistance zones for bulls. However, below 25,600/83,600, the uptrend would weaken,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities.