'Markets expect new govt to encourage investment, stable economic policies'
New Delhi: With poll uncertainty behind, investors will now be keen to know the future course of action to boost economy, solution to ease liquidity situation and measures to address financial sector dislocation, analysts said Thursday.
Focus will now be on steps taken by the government to encourage investment and stable economic policies after the BJP's strong showing in the Lok Sabha elections, they added.
Riding on a massive Modi-wave sweeping through most parts of India, the BJP is set to return to power Thursday.
"The economic and strategic reforms undertaken in the last five years will get a fresh boost with the government led by Narendra Modi coming back to power. Continuation of a stable regime under his leadership is expected to further strengthen the domestic economy" said Dharmesh Kant, Head of Retail Research at IndiaNivesh Securities Ltd.
We expect the markets to continue to be bullish going forward this year, Kant added.
"A massive mandate to the incumbent party as BJP created another historical benchmark. This is much much more than anticipated and what was expected.
"For markets, this means smooth functioning of existing policies, framework, economic activities and so much. This is a big thumbs up which means that all the work that has been in place for last few years would continue to function. Be it economical, fiscal or structural," Mustafa Nadeem, CEO, Epic Research said.
BSE Member Ramesh Damani said he expects more foreign fund inflows into India going ahead as there will be policy continuity and India still has a very large good scale of domestically investible universal companies and the deal flows are more likely to happen now.
"Now with uncertainty behind, market will focus on steps taken by the Govt to encourage investment and give push to consumption, which is hitting a soft patch. Market is looking at the second term of Modi Sarkar to build on the foundation laid in the last term.
"Market believes that stage is set for accelerating growth to higher level by tackling certain challenges like revival of investment and support consumption growth. Changing the orbit of Indian GDP growth from current 7 per cent level to higher level (eventually to aspirational double digit growth) is what markets are expecting from the second term of the Govt," said Nilesh Shah, MD & CEO, Kotak Mutual Fund.
Prime Minister Narendra Modi led his Bharatiya Janata Party towards what is certain to be a resounding victory for a second term in office.
As per Deepti Mathew, Economist at Geojit Financial Services, "Unlike in 2014, NDA-II has to deal with a much weaker economy. Rural distress and slowing investment in the country are two major issues that need to be addressed in an urgent manner. Developments in the global economy are also not favourable, especially with regard to the rising crude oil prices".
"Participants would now be keen to know the future course of action for bringing the economy back on track, solution to the liquidity situation, the Union budget, onset and progress of monsoon in June and most importantly the earnings trajectory," Devang Mehta, Head - Equity Advisory, Centrum Wealth Management said.
An analysis of the stock market movements from May 16, 2014 till date showed that the 30-share BSE Sensex jumped 14,689.65 points or 60.89 per cent. The index hit an all-time high of 40,124.96 points in morning trade on Thursday, amid trends pointing towards a thumping majority for Modi-led NDA in the general elections.
