The BJP led National Democratic Alliance's (NDA) drubbing in the Bihar elections, is not good news for the Indian stock market. The latest count shows the Grand Alliance up in 170 seats as compared to a very poor 65 seats for the BJP led NDA.

It's likely to be a sad Diwali for investors, as Foreign Portfolio Investors are likely to press the trigger. Monday may see a sharp sell-off at the beginning as analysts would now remain worried whether the Modi government would be able to push its development agenda and hence the growth agenda.

The other worry is that it is likely to embolden the opposition led by the Congress and the first casualty would be the Goods and Services Tax (GST) in the Rajya Sabha. If the GST is not passed in the Winter Session of parliament, it is likely to affect investor sentiments very badly.

To compound the misery for the markets is the strong jobs data in the US, which almost certainly now hints at an interest rate hike in the US.

Not only Monday, the next few months may see the Nifty easily fall below the 7500 levels on sustained selling. How much domestic institutions led by LIC could support the markets is difficult to say.

Corporate results have been worse than expected, which has compounded the problem even further.Investors have earlier been finding shelter in select stocks from the pharma and FMCG space. But, that bastion has also collapsed. Sun Pharma, Dr Reddy's and stocks like ITC and HUL have been falling.

However, if investors see an opportunity, they can buy good quality stocks. Select private sector banking stocks have come off sharply and so have infra names. It would be a good opportunity to buy into these names.

It's very difficult to place a bottom on this market, but a buy on dips strategy would be a good one for investors.

GoodReturns.in