The results of the Karnataka elections held on May 12, 201,8 will be declared on Tuesday, May 15, 2018. Early reports suggest Karnataka is heading towards a hung assembly as both the BJP and Congress are going neck-to-neck with 75 seats each at 9 AM.

Early trends

BJP 86

Congress 76

Janata Dal (S) 30

The 2018 Karnataka State Assembly poll is crucial for the ruling Congress party as well as the BJP and its allies. It is the last bastion of Congress, and if it crumbles, it can be well described as a tectonic shift, an end of an era in Indian politics. It could mean that this grand old party which got India freedom will only be another contender for power.

Hung assembly predicted

The exit polls are out, and different surveys are predicting different results. However, most of the exit polls are predicting a hung assembly. The effects of a hung parliament can be far-reaching. If no party gets a simple majority, the next government will depend on the largest party which nears the halfway mark.

In such a scenario there is every possibility of horse-trading from the other biggest party. The third party which in this case is Janata Dal (S) will not have many roles to play. However, if the two national parties are at quite some distance from the halfway mark, the importance of JD(S) will be immense.

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BJP to emerge as the single largest party

Many predict that BJP will the biggest single party considering it is the ruling party in the center. However, some predict a win for Congress. Anti-incumbency is a factor, but it needs to be seen if it is against the Center or the state government. Exit polls are usually released at the end of the polls, and therefore the final tally can differ.

Many experts opine that a coalition between BJP and Janata Dal (Secular) is possible based on a minimum agenda. This mechanism has been tried out in Kashmir, but it is unlikely that the JD(S) will like to endanger its secular credentials by aligning with BJP. Again there is no scarcity of exceptions. One has to look at the BJP and Samta part coalition in Bihar.

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How the results to affect the stock market

The impact of the hung assembly is already having an effect on the markets with both the Nifty managing just above10, 800 levels for the fourth consecutive day in a row.

The market is waiting pensively for the first results to trickle out tomorrow.

Harsha Upadhyaya, chief investment officer-equities at Kotak Mahindra Asset Management Company, feels that the volatility will continue in the markets until the actual results are out. Markets usually do not react upon opinion polls or exit polls since they have been way off the final results in the past.

The impact of Karnataka assembly elections 2018 will have some immediate effect on the markets, but its results cannot be felt on a long term. However, it will give an indicator of how the electorate will respond with an election due in 3 more big states like Chhattisgarh, Madhya Pradesh, and Rajasthan later this year. All the three state s are being ruled by BJP, and anti-incumbency factors will be very high in these states.

What the exit polls say

However, one thing is common in all the exit polls. The JD(S) is losing ground heavily and is losing 14 to 16 seats as compared to 2013. If this becomes a reality, its role of being a kingmaker is over. It needs to be seen where these votes have migrated. The JD(S) has lost a large chunk of its Muslim vote bank to Congress, and this will inevitably hit the BJP especially in areas where the minority votes are significant.

It is also the fact that Congress votes share is more spread out in the state which the BJP votes share is more concentrated and hence a better vote share to seat share conversion ratio. One exit poll (Axis) predict that at 39 percent votes, Congress will get 112 seats while at the same vote share the BJP is predicted to reach 120 seats.

Related read: Karnataka Assembly Election 2018: All You Need To Know

Also read: Congress projects Rahul Gandhi as Prime Ministerial Face For 2019 Elections