Brokerages note change in sentiment since 2014 election results

Market not as bullish as it was a year ago, they say

Investors are less bullish on the new government than they were last year, when Narendra Modi became Prime Minister with the largest majority in around three decades.

The Bharatiya Janata Party (BJP) and its allies got 336 out of the 543 Lok Sabha seats spurring hopes of revolutionary reforms. One year on, some believe that sky-high expectations were unrealistic to begin with, while others feel that the recent loss of political momentum may have an impact on the pace of future reforms.

Bank of America Merrill Lynch's 11th May report entitled 'The Modi Government: Reforms Report Card' said the market sentiment is not as positive as it once was.

"It has been nearly a year since the Modi Government came into power and the stock market seems to be losing a bit of faith in the ability of the Modi Government to accelerate reforms. We attribute this partly to unrealistic expectations of investors," said the report authored by research analysts Jyotivardhan Jaipuria and Anand Kumar.

An HDFC Retail Research report too noted that there has been some disappointment on the reforms front.

"The tide of national narrative seems to be turning. Despite Modi's stellar achievements in foreign policy, ensuring economic stability, movement towards devolution of financial powers to the states, emphasis on infrastructure development and taming corruption, the public focus has shifted to the agrarian crisis, Ghar Wapsi and insensitive remarks made by leaders on women issues. The sudden shift from performance to perception about the nature, composition and intent of the BJP-led government is worrisome," it said.

The hope of stronger reforms is still around, and there is a belief that big-ticket reform is likely to be executed soon according to some.

"While the government has initiated few reforms, markets are expecting more reforms from the Govt. "future rerating of the markets would depend on the pace of reforms. We continue to believe, that government would likely deliver on both administrative as well as legislative reforms in coming few quarters," added the Bank of America report.

Others however pointed out that the opposition seems to have gained more traction now than it did last year.

"With the Congress Party sensing an opportunity to corner the BJP government on the land acquisition bill, Modi will have a tough time passing the crucial legislation in parliament, and countering the 'anti-poor' and 'anti-farmer' labels from the resurgent opposition," added the HDFC report.