At the end of a gruelling six-week 2014 Lok Sabha elections, look who, apart from the politicians, would be tuning into TV channels on Monday evening to catch the exit poll results: investment bankers, fund managers, credit-rating executives and financial sector regulators.
With billions of dollars at stake, the outcome of the high-octane elections are critical to for investment decisions.
“A stable government post-election and a continued push to resolving execution bottlenecks remain key to reviving capital expenditure. We believe private new project announcements will pick up in six-nine months post elections,” Citibank said in a research report last month.
Much is riding in these polls and a comfortable BJP-led NDA victory, many brokerages believe, will be good for the economy.
On Friday, the benchmark Sensex vaulted more than 650 points amid unconfirmed reports that a leaked exit poll has projected more than 240 seats for the BJP.
Opinion polls have suggested that BJP-led NDA was ahead in the race. The exit polls are expected to give a better picture on the eventual outcome.
Experts advised investors to be cautious. “Investors should fasten their belts as it’s going to be a very crucial week ahead,” said Jayant Manglik, president, retail distribution, Religare Securities.
“In the coming week, stock prices may see high volatility,” brokerage firm Sharekhan said.
Financial regulators have got into a huddle to prevent any systemic liquidity occurrences.
The Reserve Bank of India and the Securities and Exchange Board of India have formed a special committee to jointly monitor risk management systems through stress tests to address potential liquidity and other volatility-induced crises on the poll counting day.
Last time, in 2009, trading had to be halted after markets hit the day’s upper circuit celebrating the UPA’s return to power with a greater mandate.
In 2004, markets had plunged sharply after the NDA unexpectedly lost power and the UPA formed the government with support from Left parties, which investors had then believed could delay reforms initiatives.