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Strong rally on bourses likely as bulls set to ride piggyback on UPA victory

Last Updated 17 May 2009, 16:28 IST

Domestic brokerage firm Angel Broking CMD Dinesh Thakkar said, “... the UPA could form the (next) government without the Left (and it) will further soothe investors’ nerves. The markets are expected to rally as fresh money from FIIs and those waiting on the sidelines on account of the political uncertainty, makes its way to Indian stock markets.”
As it is now clear that the UPA would form the government again, and without the Left support this time, analysts said the Sensex could rise by 700-800 points on Monday — the first trading day after the announcement of the results.

After the 2004 elections, the markets plummeted over 800 points at the prospects of Left parties exerting influence over policy decisions of the UPA government. Tomorrow’s rally, if it takes place, would be just the opposite of what happened on bourses after the poll results were out five years ago.

“The verdict of the people is clear ... The Left is left out. The UPA has a clearer mandate than they had during the last polls,” Kejriwal Research and Investment Services Head Arun Kejriwal said. While most of the market experts expect a rally between 400 points and 700 points, some of them said the surge could be as high as 800-1,000 points.

Flow of foreign funds

ICICI Securities Managing Director and CEO Madhabi Puri Buch said India is likely to see a healthy capital market and robust flow of foreign funds once the new government takes charge at the Centre and presents the full budget. Sensex had surged 300 points on Friday, the last trading session, to settle at 12,173.42 points. A rally of 500-700 points could take the benchmark closer to 13,000 on Monday. Experts have also exuded confidence that the market would continue to trade on the higher trajectory in the coming week. Sharekhan’s Research Head Gaurav Dua said it was clear that “people voted for a stable party and made it clear that they do not want to follow Leftist ideologies”. Markets will give a thumbs-up on Monday and open firm. A 100-150 point rally on the Nifty can be expected as investor sentiment would be high as a stable government comes to power, he added.

Angel Broking’s Thakkar further said, “The election results have come as a positive surprise and are expected to go down well with the markets considering that markets like continuity of the government policies, mindsets and ideologies.”   Taurus Mutual Fund Managing Director R K Gupta said “market will take the win of the UPA in a very positive way. The UPA’s victory margin indicates that market will give a thumbs-up to the Left party wash out when it opens on Monday. It would be a strong opening.” Gupta, however, added that “tensions will come back into Dalal Street when there will portfolio allocation among the ministers.

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(Published 17 May 2009, 16:28 IST)

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