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The markets have given a thumb-up to the outcome of Assembly polls that saw the baton of governance pass on to Bharatiya Janata Party (BJP) from Congress in most states with the benchmark indices – the S&P BSE Sensex and the Nifty hitting all-time highs. But is this rise sustainable? Check out what the market experts say
Sanjeev Prasad, senior executive director and co-head, Kotak Institutional Equities
The markets have more or less discounted the outcome of the Assembly polls since the results are in line with opinion and exit polls. For the BJP to form the next government at the Centre, it will have to do exceedingly well in Bihar and Uttar Pradesh
Deven Choksey, managing director and chief executive, K R Choksey Shares and Securities
The election outcome is on expected lines. The markets are likely to see this election outcome as a positive. The market, in my opinion, wants a Bharatiya Janata Party (BJP)-led government to run the country post the next elections. I think the BJP could have scored more in Delhi but overall, I think they have scored on expected lines. The market has been factoring in this possibility to some extent. The upside in the markets will be sustainable. I think the Nifty will sustain above 6,200 (on the downside) and 6,400 (on the upside).
Rajesh Cheruvu, chief investment officer, RBS Private Banking
I think that the markets will take the result outcome very positively. I think the impact will be seen tomorrow itself with the markets opening up with a gap. The rally is likely to continue with the Nifty scaling up to new highs – possibly 6,400 to 6,500 levels – in the near term. Heading into 2014, we believe that the liquidity will continue to pour into the emerging markets, especially India as the tapering by the US Federal Reserve is still some time away.
Rajat Rajgarhia, head research, Motilal Oswal Financial Services
A record high voter turnout, decisive mandates, and a clear preference for growth and governance over entitlements have been the highlights of Indian state elections over the last three years. The 2013 Assembly elections, touted as semi final ahead of 2014 general elections, reaffirmed each of these trends. These unmistakable trends will shape the outcome of forthcoming General elections as well, in our view. Going ahead, as the economy sees a gradual pick-up, and a decisive mandate in 2014 Elections create a positive environment, growth rates will rebound significantly from the last 2 years averages. ICICI Bank, PNB, IDFC, Hero Motocorp, Maruti Suzuki, L&T, ACC, ONGC, BPCL, NTPC, Bharti Airtel and Infosys remain our top picks.
PVK Mohan, head of equities, Principal Mutual Fund
The markets have reacted favourably to global cues and favourable results of the elections in the states of Delhi, Chattisgarsh, Rajasthan and Madhya Pradesh. This has has further bolstered the prospects of a stable govt. in the 2014 elections. With global liquidity conditions favourable, India continues to attract FII inflows on expectations of favourable poll results in 2014 and the revival in the economy. However, some caution seems due, as much of the positive news seems to have been captured in the recent rally. Of concerns would be sticky high inflation and the possibility of further rate hike by RBI, notwithstanding the expected stimulus withdrawal by US fed in 2014.
