"Counting will start by 7 a.m. and by the time the markets open, there would already be a buzz around who is leading. This is largely going to dictate in which direction the markets will open," said Amit Gupta, Co-Founder and CEO, TradingBells.
"If the NDA is leading, markets might see a 'gap-up' opening (sharp upward movement in little or no trading time) and if UPA is leading, it might just be the opposite."
With monthly futures contracts are also nearing their end and investors entering into new contracts, there is usually a period of volatility that results in markets seeing a fall.
Gupta claimed that Nifty will cross 12,000 if the NDA manages to secure a majority. "However if this doesn't happen and there is a hung Parliament, or UPA comes to power, we can expect to see a huge correction in the markets over the next couple of days.
"In such a scenario, if Nifty breaches its last week's low of 11,050 which also happens to be its current 200 DMA, then we can see further downside movement up to 10,450 where we see the next support," he added.
Analysts have further predicted a huge correction, probably of a higher magnitude, than the one seen on Monday, when the euphoria of exit polls showing a return of Prime Minister Narendra Modi gripped the markets.
Nifty forms a spinning candle on the daily chart after two volatile sessions, which shows outright confusion just ahead of the counting. Stocks like Reliance, Tata Steel, HDFC, and Infosys remained muted ahead of counting day, said Mustafa Nadeem, CEO, Epic Research.
SGX currently displays 48 points lower compared to the Nifty Futures close on Wednesday at 8.40 p.m. Singapore time. "This probably reflects the impact of institutional data for Wednesday released sometime back whereby both FPIs and locals were net sellers on Wednesday," said Deepak Jasani of HDFC Securities.
Positive trends on SGX Nifty, a futures instrument traded in the Singapore Stock Exchange, indicate a strong opening for the benchmark indices in India and vice versa.
"Even European markets softened a bit post Indian market closing. Going by this and assuming that not much will change despite US markets trading between now and tomorrow morning, Nifty futures could open a bit soft tomorrow," Jasani said.
Beside, he added that the SGX Nifty is traded between 6.30 a.m. and 11 p.m. Indian time and hence will keep reacting to various developments and that the markets could remain volatile on Thursday awaiting results which could take time, given the higher proportion of VVPAT votes to be manually counted.
( With inputs from IANS )