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Investment bankers, number-crunchers hit campaign trail

india Updated: Apr 21, 2014 11:12 IST
Gaurav Choudhury
Gaurav Choudhury
Hindustan Times
Lok Sabha elections

It is getting crowded out there. With the Lok Sabha elections entering the final lap and 311 seats at stake in the next four rounds, global investment bankers, fund managers and number-crunchers have hit the campaign trail.

The global financial sector, through its Indian arms, is looking for heads-up on the outcome of the high-octane elections to make sound investment decisions. And, boardroom crystal-ball gazing isn’t enough when billions of dollars are at stake.

So, Religare, Nomura, Citibank, Morgan Stanley and Motilal Oswal, among others, have come out with detailed election reports, with some packing off analysts to the hinterland to get up to speed on the ground situation.

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Much is riding on these elections. If investors can get an early leads on the outcome -- or a clear estimation of the winning side -- they can take decisions based on what they think the party’s stance would be on a given sector, such as infrastructure. Projects worth more than Rs. 100,000 crore are stalled, awaiting regulatory and government approvals.

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Some of the analysts are roughing it out in Uttar Pradesh, a bellwether state that sends the largest number of members — 80 — to the Lok Sabha. Many are and would be touring high-profile constituencies such as Amethi and Varanasi, sending feedbacks and preparing reports for internal use and advisories to clients. Congress vice-president Rahul Gandhi, who is leading the party’s campaign, is seeking re-election from Amethi while BJP’s PM candidate Narendra Modi is in the running from Varanasi.

Number-crunchers have also visited Mahrashtra’s Vidharbha region plagued by repeated crop failures and farmers suicides.

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“We see a 75% probability that the BJP-led National Democratic Alliance will secure a solid enough plurality to pull together a majority coalition under the leadership of Narendra Modi,” said Nomura, a Japan-based brokerage and research firm, in an April 8 report -- India’s Defining Moment.

HT has reviewed in-house election notes by Citibank, Motilal Oswal, Morgan Stanley as well. Besides field reports, these firms have been talking to political analysts as well to get a better understanding of what have been described as the most-crucial Lok Sabha polls to date.

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During a two-day conference — Indian Politics & Beyond 2014: Unearthing the Election & Social Trends for the World’s Largest Democracy -- hosted by Citibank, analysts such as Sunjoy Joshi, director at Delhi-based think-tank Observer Research Foundation, and columnist and journalist Swapan Dasgupta briefed the gathering.

“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 six-nine months post elections,” the bank said in a report.

In its Mandate 2014, brokerage and research firm Motilal Oswal said Indians wanted a central government that could bring back the era of high economic growth. “The recent state elections have shown the decisiveness of Indian electorate to vote for a change, to vote for development and governance, and to vote against corruption,” the report said.

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High turnouts have been noted with interest. Typically, they reinforce the notion of an anti-incumbency vote but investment decisions need firm foresight, not mere speculation.

“Higher turnout may not necessarily be an anti-incumbency vote always. Theoretically, it could even be that more traditional voters of the Congress have come out, sensing a defeat of their party,” said Praveen Rai, a scholar with Centre for the Study of Developing Societies.