Over the years the impact of politics on business and financial markets has diminished greatly. The markets don't expect much from politicians anymore, anything positive is taken as a bonus but life carries on regardless; and not too badly either as we have seen in the last few years.
Yet, when the ugly face of instability pops up once every few years then the markets do get jittery. There is no government collapse yet but the possibility certainly exists. One can debate whether any particular combination of people in power is markedly different from, or better than, any other, at least for the business community, yet there's no denying the fact that the prospect of a government being pulled down at the Centre does have a big impact on sentiment. It just cannot be wished away. To be fair though, the Left spokesperson didn't sound terribly hawkish in the press briefing.
Karat reiterated the Left's stand against the nuclear deal but said he wanted a debate in Parliament and not to withdraw support from the government if they could help it.
This uncertainty comes at an unfortunate juncture, when global markets have been stabilising and pulling back from their recent losses. India sadly has been left out because of it's political problems. Since August 20, the Hang Seng index is up 7 per cent, Nikkei 6 per cent and Kospi 4 per cent. The Sensex is down 2 per cent. It would be sad if global markets correct again from here, in which case we wouldn't have had joined the rally yet would fall with the world, if it slips again. The worst of both worlds, really.
Not unexpectedly, mid-caps are bearing the brunt of this uncertainty. The Nifty too remains dangerously close to its support of 4,000. A single wave of panic from New Delhi or Wall Street can break this strong psychological support. In all this turmoil we have taken global stability for granted. One hopes that the seeming calm in global markets this week will not be ruffled by another wave of volatility. That would be too much to bear for us.
The Prime Minister's words on the inevitability of spring following winter hold especially true for the stock market. Ironically, it depends squarely on him and his party whether this turns out to be a long and bitter winter before spring returns or just a vicious but transient cold snap.
(The writer is Executive Editor, CNBC-TV 18)