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Straight from the Specialists

India market weekahead – Partial profit-booking may be prudent before election results

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

The so-called “rally of hope” stuttered during the week as Indian markets turned volatile. The Nifty closed at 6695, down 1.30 percent. The fear of the El Nino effect and the IMD forecast of below-normal rainfall seems to have made investors cautious.

With election results two weeks away, investors need to take a stand in the next few days. Although there can be a number of outcomes, only two would be termed positive for the markets – a landslide victory or a comfortable majority to form a stable government. The other scenarios such as a fractured mandate, a third front coalition or a weak UPA or NDA coalition would deflate the sentiment built up till date as the markets have already discounted a favourable outcome.

A broker monitors a screen displaying live stock quotes on the floor of a trading firm in MumbaiIn case of a coalition getting a majority, we could see the markets getting into a short-term state of euphoria as the new government would be seen as a messiah. On the other hand, expectations would be the biggest hazard for the new government as any slip would not be overlooked.

Among the challenges for the new government, the failure of monsoon rains could be the biggest one – which could deflect its attention and resources, besides having a negative effect on growth prospects. After the initial days of bonhomie, serious investors would start getting down to brass tacks. Every action and communication would be scrutinized to check whether the delivery is as per promises made during the election.

Time to ride the rally in the run-up to 2014 elections

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

Election fever in the world’s biggest democracy is gripping India in the run-up to general elections due in 2014. In the coming months, politics will be in focus especially among investors.

Assembly elections in Chhattisgarh, Delhi, Madhya Pradesh and Rajasthan were a prelude to next year’s election. The four states make up 72 seats in the Lok Sabha. Historical data suggests the electorate votes on the same lines for the Lok Sabha in case state polls are held within 12 months of the general elections.

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