Markets expected to soar Monday on UPA win

Sun, May 17 01:13 PM

New Delhi, May 17 (IANS) It’s buoyant equities markets that are expected when trade resumes

Monday morning.

Last week, when the rest of India was anticipating a fractured mandate, the equities markets

made short work of the political uncertainty with a key index ending weekly trade up 300 points.

Now, with a Congress-led coalition set to take over and the shackles of Left parties broken -

fears of instability evaporated over the weekend.

Summing up the mood was Mayank Jain, a Delhi-based trader who told the media after the poll

results had sunk in: “I’m happy that we are going to have a stable government. Just wait and see

how stock markets will zoom on Monday.”

Concurred Arvind Mahajan, executive director with leading global consultancy KPMG. “The

results will certainly have a positive impact on the markets as they were hoping for stability in

the next government,” he said.

“Given that Left support may not be required this time, the Manmohan Singh government is

expected to be more reformist than in the past,” Mahajan told IANS, referring to constant

roadblocks when the Left parties were supporting the UPA from outside.

The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) had already gained

over 300 points, or 2.53 percent, Friday - the last trading session before the weekend break -

anticipating a stable government.

And with actual results showing much better poll performance by the ruling alliance and strong

numbers for the Congress, sentiments were expected to remain positive Monday when trading

resumes, said analysts.

“Since past few weeks, the markets were in a no-trading zone, moving in a tight range. But now

there should be a breakout on Monday,” said Neera Jain, chief technical analyst at stock analyses

firm CRN India.

“At this moment the markets are in an uptrend. Stocks are expected to further rise on Monday.”

According to Jagannadham Thunuguntla, equity head at SMC Capitals, it’s “a clear

mandate”.

The markets couldn’t have asked for anything better. Now the government can continue with its

economic policy without interference from the Left,” Thunuguntla said.

In the run-up to the counting of votes, Friday had seen 12 out of the 13 sector-specific indices of

the BSE end in the green, even as 25 out of 30 Sensex scrips closed with handsome gains.

Data available with the BSE also showed that unlike the past two elections, when markets had

tumbled, the Sensex this time actually gained during the month-long run-up till Friday - up

1,226.02 points, or 11.2 percent, since April 16.

In October 1999, when the National Democratic Alliance (NDA) had returned to power, the

Sensex fell 7.5 percent on fears that then prime minister Atal Bihari Vajpayee may not be able to

hold the new coalition together.

Similarly in May 2004, on the eve of the UPA taking over the reins, the key index plummetted

15.7 percent as investors were rattled that the NDA - which by then was seen as investor friendly

- would not return to power.

But this time the markets did not slip, though the sentiments remained cautious. And looking

ahead, analysts felt the outlook was positive, although they also maintained that fundamentals

will eventually play the decisive role.

SMC’s Thunuguntla said it would take a little time for the markets to digest the news. “But a

bounce can certainly be expected. In the next coming days, it will not be surprising to see

anywhere between an 8-10 percent jump in Sensex.”