were trading mixed on Friday, with Nikkei, Straits Times and KOSPI marginally in the green, while Hang Seng, Taiwan Weighted and Jakarta Composite slipped 0.1% - 0.3% in intra-day deals. Back home, the S&P BSE Sensex and the Nifty50 indices were trading around 0.2% lower each at 31,153 and 9,618 levels, respectively. They, however, managed to recover losses and end 0.2% higher at 31,262 and 9,668 levels.
Also Read: UK elections 2017: May loses majority; hung Parliament confirmed
Going ahead, the reaction by financial markets
will be seen as an important gauge of how investors look at the United Kingdom’s prospects, the impact on Indian markets
is likely to be limited.
Though the fall seen on Friday was warranted given the global linkages, analysts say, Indian markets
are expected to perform better than most other emerging and developed markets
over the long run. On the contrary, the UK poll outcome that could delay Brexit
talks could work in favour of global financial markets, including India.
The Indian economy with a stable macro environment and government pushing through reforms, favourable monsoon forecasts and with a banking sector undergoing an overhaul, Indian markets
have enough buffers to withstand the poll outcome in the short-term, analysts say. They expect the impact to be transitory in nature with the markets
likely to recover soon from any knee-jerk reaction.
Also Read: What a hung parliament means for Britain
For the rest of the world besides the UK, the poll outcome is irrelevant in a fundamental sense. This means that any short-term volatility in global markets
arising from this election should be exploited to build positions or take profits in any assets which temporarily get mispriced, said Jan Dehn, head of research at London-based Ashmore Investment Management in a recent interview with Business Standard
Going ahead, implementation and impact of goods and services tax (GST) bill on the economy, progress of monsoon and corporate earnings are some of the other important factors that the markets
will react to in the short-to-medium term.
“There will be a reaction from the global financial markets, and the Indian markets
are likely to perform in line. What we have seen historically is that the reaction doesn’t last beyond a day or two. For India, what matters more is the implementation of GST
bill and its impact on the economy and corporate earnings. The UK poll outcome will have a transitory impact at best and the markets
will recover soon,” says Ambareesh Baliga, an independent market analyst.