The Nitish Kumar-led Grand Alliance won 178 seats in the assembly election

The BSE Sensex fell as much as 600 points or over 2 per cent on Monday following the BJP-led National Democratic Alliance's massive loss in Bihar. Analysts said Monday's sharp fall was a knee-jerk reaction to the BJP's rout in Bihar, where the party could win just 58 out of 243 seats.The Nitish Kumar-led Grand Alliance won 178 seats in the assembly election."Market expectations of Modi's alliance winning in Bihar were tapering over the last few days and exit polls also pointed towards a tightly fought election - but a rout had not been expected," said market expert Ambareesh Baliga.The BSE Sensex traded below the psychological 26,000 mark for the first time since September 30, while the 50-share Nifty slipped below the key 7,800 levels in early trade. The rupee also took a sharp hit, falling over 1 per cent to 66.50 per dollar before making some recovery.The big worry for investors is about economic reforms, which may get pushed back amid rising political opposition, traders said. However, most analysts contested the Street view."Any correction in markets should be temporary and an opportunity to buy... We do not expect any change in direction or pace of reforms," said Prabhat Awasthi of Nomura.Sanjeev Prasad of Kotak Equities said, "Bihar elections results will not have impact on economic reforms... Market at reasonable valuations but require reform support."An hour into trading, the Sensex showcased a recovery, gaining over 250 points from the day's low as investors rushed to buy at lower levels. As of 10.05 a.m., the Sensex was down 343 points at 25,922, while the Nifty traded 106 points lower at 7,848.



(With inputs from Reuters)