There’s only one thing on everybody’s mind now and that’s the general election. We’re concerned about which combination of parties will come to power and what impact it will have on the quality of governance, on the economy and on the markets. It’s not only political reporters and psephologists who are having a field day—even the brokerages have jumped into the fray. Every broking house worth its salt has published its analysis of the election results and why it is so important for the markets.
Here’s a fairly typical sample, from Motilal Oswal: “In 1QFY10, the most important event for the markets would be the General Elections scheduled for April-May 2009. Market reaction was very adverse to the unexpected outcome of the elections in May 2004. The recent history of state election results in Rajasthan, Madhya Pradesh, Chhattisgarh, Delhi, Jammu and Kashmir, etc., and the stance of various regional parties do not provide any pointers to the likely winner. While the government will be formed through a coalition of multiple political parties (no single party is likely to win a majority on its own), the dominant party, its allies and their willingness to introduce economic reforms would be a significant catalyst for Indian equities. This becomes even more important in the current environment of economic slowdown.”