There may be high hopes from the polls when it comes to economic momentum of the country, but economists are of the view that Indian economy is much more dependent on the global economic cycle than who rules in Delhi.
There is a growing perception that elections could kick-start the investment cycle with various leaders blaming the recent slowdown in growth momentum on policy inaction due to the upcoming Lok Sabha polls even as some others pin hopes on a regime change.
However, economists, including those at some large global financial conglomerates, believe that such high hopes may not come true, at least in entirety.
"We disagree with the consensus that elections can revive the investment cycle," economists at Credit Suisse said, adding that "such misplaced optimism ignores the realities of the business cycle and overestimates the power of the central government".
Echoing those sentiments, Bank of America Merrill Lynch analysts said, "We can only continue to emphasise that the global economic cycle drives India's growth far more than who rules in Delhi."
Credit Suisse as well as Bank of America Merrill Lynch have conveyed these views in the research notes prepared for their respective clients in India and abroad.
The Indian stock market had seen a massive 15.9% sell-off in May 2004 after the surprise defeat of NDA, while a 15% Sensex rally was witnessed after the emphatic re-election of UPA in May 2009.
On both occasions, the markets failed to get the poll outcomes correctly, experts opine.
According to analysts at BNP Paribas, the risk of political uncertainty after elections remains for India, notwithstanding the current opinion polls predicting a strong showing by BJP.
Economists have broadly listed four post-poll scenarios: Narendra Modi-led NDA government with two-three allies; Modi- led NDA government with five-six allies; other leader led-NDA government with 8-10 allies or a Third Front government supported by Congress.
In the first scenario, the rally in the market is likely to continue (assuming supportive global cues) "for 2-3 months till market participants realise government's inability to drive rapid changes and 1QFY15 results temper optimism," the Credit Suisse report said.
In the second case, there is likely to be a temporary lull in the market (flows-wise) till a post-poll alliance is stitched up to put Modi at the helm although sentiments are likely to remain positive.
In case of other leader led NDA government, markets are expected to take negatively to "No-Modi" at the Centre and a potentially unstable government.
In the fourth scenario, there would be "unwinding of the beta rally as apprehension of a rating downgrade emerges", it added.
Recent surveys suggest the BJP-led National Democratic Alliance coalition has solidified its lead and is now poised to emerge as the largest coalition.
According to the BofA-ML report, the BJP-led NDA has a "fighting chance in around 425 of the 543 seats".
"BJP seems to be ahead in the race reinforcing their image of being the front-runner in the polls." Some opinion polls currently project more than 220 seats for the BJP-led alliance, Credit Suisse said, while adding that "such a verdict would fuel a continuation of the rally in cyclicals".
A less than 180-seat verdict for the BJP-led alliance is likely to cause a major market correction, it added.
With better earnings revisions and growth than most other EMs, and with its declining inflation, India looks relatively more attractive than other emerging markets, Credit Suisse added.