Foreign banks bullish on markets; Sensex to touch 28k by 2014 end
May 16 2014 , New Delhi
Most of the global financial services majors believe that Narendra Modi, the Prime Ministerial candidate of the BJP, is business friendly and the Modi-led government will be ready to take tough decisions, given the strong mandate it has received.
Experts believe that over the past decade, a fragmented coalition with differing economic ideologies had been the key reason for the economic malaise, and since this verdict has given the Modi-led BJP a clear majority, it will pave way for a more proactive government.
"India has delivered one of the most decisive electoral verdicts since 1984," Deutsche Bank said in a research note, adding that "the political platform now delivered to the NDA is historic and should result in a simultaneous revival of investor, consumer and corporate confidence."
With the economy and the investment cycle at the center focus of the new government, equity markets are likely to react to the verdict with euphoria, the report says.
Echoing similar sentiments, "this is a big and positive surprise for the market, in our view, and could heralds a strong and stable government."
Investors are betting on Modi-led BJP government seeing his track record in Gujarat and as his political campaign was focused more on development rather than populism.
"Given that Modi has won a strong mandate on a campaign focused around driving higher growth, markets will likely continue to believe that the policy outline will be positive. Our view is that it will be," UBS said in a research note.
"We remain bullish on Indian equities. It may be early to book profits," UBS said in a report adding that "we set our Nifty target for end-2014 at 8000."
There could be upside to this target based on how policymaking evolves over next few months, which could flow through to earnings estimates and multiples higher than average, the report added.
"We see the confidence among domestic and foreign investors returning to India & expect India to remain a very promising destination," DBS Bank Head, Treasury and Markets Vijayan S said.
The win is an opportunity to give much needed direction and decisions on the infrastructure, retail and insurance sectors to build jobs and bring fresh investments and address the more urgent issues to build confidence – like recapitalising banks in the public sectors, clarifications on some of the retrospective tax laws, Vijayan added.