Monday, May 18, 2009

UPA Clean Sweep: Markets Ready to Celebrate

Get the drums and the trumpets out!! Its party time folks! The election results have once again stumped the nation and the verdict which has come forth is absolutely stunning!

The various permutations and combinations of all the channels and the newspapers seemed to have gone to waste. All were right in stating that the UPA would lead but no one had expected the UPA to literally sweep the polls. The much feared Left is routed out in its own ‘home’ state – West Bengal. This means that the Left will no longer be a part of the ruling Govt and that in itself is the single best news for the stock markets. The Monday opening is expected to be thunderous and just as the UPA smothered the Third Front and the NDA, the bulls are now expected to kick out the bears. With one single party expected to come to the centre, FIIs will also be queuing up to have a slice of the pie of India, which now once again looks juicy.

Three important things have emerged from this verdict – the Left is out of the Govt; UPA is emerging as the majority party which puts to rest the ambitions of the “regional” parties and the routing out of the Third Front means that for the next few years, hopefully the next five years, regional parties will not demean the national interest.

The election verdict shows that people have voted for stability over anything else. They have thrown out the caste and regional agenda’s of the various parties and what people really wanted was a more secular party. Many had voted for the Congress saying that it is the better devil amongst the sea of devils. Whatever be the reasons, the pitching of young and educated candidates has surely gone in favour of UPA.

The success of UPA can be directly attributed to the hugely popular NREGA – National Rural Employment Guarantee Act. And the much controversial farmer debt waivers has also helped immensely. These two have gone hugely in favour of the UPA. When money is put into the pockets of the people through employment, what more could they ask for?

The victory of UPA will prove to be the best news for the stock market. As we have always maintained, it is sentiments which over rules anything. So right now the sentiments are buoyant and with the UPA being elected back, the extremely positive sentiments will boost the moods all over.

Yes, the issues of the burgeoning fiscal deficit, unemployment, the global crisis, rising food grain prices; all these issues remain. But with the UPA coming to power, what we will have is a continuity in the policies, we will now see privatisation taking off in a big way, the financial sector reforms, especially for the banking and insurance sector will be done on a war footing. FIIs, assured now by the political stability at the Centre will be coming back in droves, once again talking about “attractive valuations” in India. FDI inflows would take a leap. The first thing on the agenda after the Govt is sworn in would be the presentation of the Budget, sometime around June or early July. And this would be a Budget to really look forward to!

All in all, this is a fantastic verdict. This is celebration time for India after a really very long time. Enjoy the moment and get set for the stock market ride when the market opens on Monday!
Source: (By Ruma Dubey)

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