Congress is set to form the government yet again with a clear voting margin.
Manmohan Singh seems to be getting a free hand. A government at the centre without the support of the parties with narrower national outlook is very much supportive for the markets.
The ruling Congress-led alliance was projected on Saturday to win a second term in office after a general election, according to vote counting trends from the election commission.
Analysts say this would cheer markets as the coalition government would not need the support of leftist parties that have blocked liberal reforms and opposed foreign investment particularly in the financial sector.
Market Voices:
SAMIR ARORA, FUND MANAGER, HELIOS CAPITAL MANAGEMENT, SINGAPORE:
“This is a dream for the market. You could not have thought of anything better than this. Get ready for a 7-8 percent rally in the stock market on Monday.
“I don’t expect them to do full-scale privatisation. On reforms, what they were prevented from doing last time around, this time they will not be. So expect them to start off with some financial services and stronger pension reforms.”
SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI
“It will help them pick up the pace of reforms as like-minded parties form the government, lending greater stability and ability to carry out reforms at a faster pace. Market sentiment and business confidence will find support.”
J MOSES HARDING, HEAD OF GLOBAL MARKETS, INDUSIND BANK, MUMBAI:
“It is more or less a clear mandate. So it should be positive for all the markets.
“Congress has to depend less on other parties. They can continue their focus on growth. The first half of the borrowing programme should go smoothly. Foreign investors will likely come into India now. This should help stocks and the rupee.
“There could be some problem with money supply growth, which could put pressure on inflation. That is the only negative.”
RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI:
“This would give a sense of political stability and continuity. All looks well for the reform programme to gain momentum once again. Markets will take this as positive news. There would be more confidence in the markets. This would help retain investment from FDI and FII inflows.
“The budget now will focus on the disinvestment programme. The budget will also look at infrastructure spending and fiscal consolidation. Economic slowdown means less tax receipts, so they have to look at disinvestments to bridge the gap.”
SRINIVASA RAGHAVAN, HEAD OF TREASURY, IDBI GILTS, MUMBAI:
“Manmohan Singh seems to be getting a free hand. A government at the centre without the support of the parties with narrower national outlook is very much supportive for the markets.
“Stocks will rally, bond yields will ease. I expect the government to continue its softer interest rate policy. In fact, more easing can be expected.
“The insurance and pension sectors will be further opened up for foreign investments. Both FDI and FII investment will get a boost. Increased investments in infrastructure and other key sectors will keep growth on track.”
SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES, MUMBAI
“There’s a positive and a negative — UPA without left will be more positive for economic reform, but the provisions in the Congress manifesto will keep the fiscal deficit high.”
GAJENDRA NAGPAL, CEO, UNICON FINANCIAL, NEW DELHI
“I am pleased with the outcome in the sense that this has set the stage for reforms in the next five years. Reducing fiscal deficit, opening up of sectors like insurance are the need of the hour. I think the markets will take it positively and you will definitely see a gap up opening on Monday.”
V.K. SHARMA, HEAD OF RESEARCH, NAGRAM STOCK BROKING, AHMEDABAD
“The results are a pleasant surprise, after the fractured exit polls we saw. The best part is regional parties have become non-players. I expect Congress to continue with reform programmes in the absence of the left. The markets will give it a thumbs up on Monday. You might see a gap up opening to the tune of 7 percent.”
Sources: ProfitControl
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