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Home > Media > Election euphoria in India causes stockmarket surge

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Election euphoria in India causes stockmarket surge
Citywire
18th May 2009

Shares on Bombay's Sensex index jumped 17% on Monday morning following the election victory of the Congress party.Trading was suspended after the 30-stock Sensex index surged to 14,273 points. Investors were full of confidence after an emphatic general election victory for the Congress party-led United Progressive Alliance, which is set to press ahead with radical economic reforms. These reforms are expected to include increased privatisation as well as moves to enourage private participation in infrastructure and education reforms. Commenting on the election results Shyam Kumar, CEO of Indian asset manager Kotak Mahindra, said: 'Investors like certainty. With this decisive mandate, one of the major challenges and risks facing investors looking at the Indian market - political uncertainty - is now behind us. This change is unlike a quarterly surprise or a near term positive but in fact is a medium to long term positive.'He believes the election result brings with it the prospect of long term re-rating potential for the rapidly-growing Indian economy. He thinks infrastructure is set to continue to be one of the main beneficiaries of the government's programmes.'Of the three pillars of the Indian growth story- favourable demographics-led consumption, infrastructure development and outsourcing, Kotak Mahindra believes the maximum positive impact of a stable government would be on infrastructure development,' Kumar says. 'While consumption will get a leg-up with sustained rural buoyancy and exports might be impacted by the strengthening rupee, the thrust of resource allocation on infrastructure will see maximum benefits.'

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