is the first time in the past 30 years that, a single party has won the majority in Indian elections. The formation of a stable Government at the centre bodes well for the economy as well as stock markets.
We believe that, the new Government will take steps and measures to take the growth rates higher on a sustainable basis in the long term. We expect steps to increase public investments and encourage private investments in infrastructure, ensure better Governance, reduce Fiscal Deficit (including control of wasteful subsidies), implement structural reforms like GST, DTC, improve Center – State relationships, control inflation by taking effective steps to ease the supply side constraints, etc.
However, we also feel that, it will take measured steps, rather than taking short term steps, as is being hoped by the market. It’s a new dawn; bright sunshine will follow.
The formation of the Cabinet and the 2014-15 budget will be the important events to watch out for.
From the market’s perspective, it is a significant development. We remain optimistic on the long term prospects of the markets. However, in the short term, markets may remain ranged or may even come under some profit-booking, especially after the sharp rise witnessed in the recent past. The outcome was discounted by the markets to a certain extent.
Based on our expectations that, strong reforms initiatives will be taken by the new Government, we continue to expect that, the domestic cyclical and infrastructure themes will out-perform.
Rajesh Iyer, Head- Investments and Family Office, Kotak Wealth Management:
Clear majority would boost sentiments and would have ripple down effect on the economy over the short term. Post initial euphoria it is the policy measures which would have real impact on the economy. For the bond market the budget would become crucial as the fiscal deficit number would actually indicate if there would be any additional govt. borrowing in the current fiscal compared to the one indicated in vote-on-account budget.
Clear mandate would provide room for significant reforms and a broad based rerating in the markets. Continue to be bullish with scope for Mid-caps and small caps to provide significant outperformance as investors start looking beyond large caps for alpha.
Raghu Kumar, Cofounder, RKSV:
After early polls showed that the BJP led NDA government is going to easily get the required 272 votes to win the election and hence, make Narendra Modi India's new Prime Minister,