While protests in Thailand spurred the government to declare a state of emergency in the capital, the move was largely expected and analysts believe the country's stock market will muddle through until the elections.
The government declared a 60-day state of emergency in Bangkok and surrounding provinces late Tuesday, allowing security agencies powers including enforcing curfews, detaining suspects without charges and preventing political gatherings of more than five people.
(Read more: Thai government declares state of emergency)
It isn't entirely clear whether the declaration will affect the protests much as the government has said it doesn't plan to clear protestors' camps at major road junctions and so far it hasn't set a curfew.
"It doesn't necessarily change the game. It could just be a formality and until they take more stern action, the market will probably just wait and see," said Derek Bloomfield, an analyst at Deutsche Tisco. The SET index opened down around 0.7 percent.
"If they make the declaration and then stand back and don't actually do anything, then it doesn't actually change the market outlook," he said, adding the government appears to be trying to maintain peace. But he noted shares could react negatively if the government uses force to clear the protests, as it could cause the situation to escalate.
(Read more: To cut or not cut? Thailand mulls rate move)
Over the weekend, around 30 people were injured after explosions at a camp of anti-government protestors and one person was killed and around 35 wounded in a separate grenade attack.
Others also expected a muted market reaction.
"This is something local investors have expected and indeed, the previous six times an emergency decree has been announced, the SET fell 0.9 percent on the day, but rebounded 3.4 percent a month later," Julius Baer said in a note.
Foreign investors already pulled around 194 billion baht, or $6 billion, from Thai shares in 2013, reversing the inflows of the last four years
(Read more: Has Thailand's government survived the gauntlet?)
"Those who wanted to sell have already done so and those who haven't stayed inside," Song Seng Wun, head of research at CIMB, told CNBC. "Valuations are cheap, but certainly at this juncture, would you jump in? Probably not."
Observers are more concerned about the protests' effect on the country's economy than the relative resilience of its markets, with many economists cutting their growth forecasts.
Thailand's finance ministry has cut its 2014 growth forecast to 3.1 percent from 4 percent.
"Virtually all demand-side components of GDP (gross domestic product) will likely be affected by the ongoing political unrest in the near term, led by slowing tourism and private investment," Nomura said in a note. "A bigger concern is the damage to Thailand's longer-term growth potential, which is already slowing. Given the political focus, much-needed economic reforms and infrastructure will likely take a backseat."
(Read more: Thai unrest casts doubt on investment expansions)
Many are hoping upcoming elections, set for February 2, might pave the way for a political resolution. But it's unclear whether the elections will proceed, with the Election Commission seeking approval from the Constitutional Court for a delay, or even whether all sides will accept the results.
The turmoil has led to concerns foreign companies may look elsewhere in the region rather than build or expand manufacturing facilities there.
"As long as we have this current landscape where we've got rural versus to some extent the urban wealth divide, you'll probably find that whoever is in charge may still be faced potentially with a repeat of what we're currently experiencing," CIMB's Song said. "While investors have this Teflon effect still, they might say maybe there are alternatives which provide greater stability."
Song noted, however, that some industries, such as the auto sector, are large, making up around 10 percent of Thailand's GDP, and any decisions about moving production will take time.
The protests, which began in late October, were triggered by parliament's consideration of a government-backed amnesty bill that could have allowed former Prime Minister Thaksin Shinawatra, who was ousted in a 2006 coup d'etat, to return home without facing time in prison for a 2008 graft sentence.
While the amnesty bill was dropped, the street protests have broadened out to an explicit call for Yingluck, who is Thaksin's sister, to step down.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1