A clear mandate awarded by the Indian electorate helped the Indian stockmarkets create history with the Sensex and the Nifty hitting the upper circuit twice in a single trading session.
Ironically, during the last Lok Sabha Elections in 2004, when the Congress-led UPA came to power, the Indian stockmarket had hit lower circuit and trading was halted for some part of the day; so much was the pessimism against the change. And after five years, we have the incumbent Government back in power.
However, this time around, the stockmarkets have behaved diagonally opposite and rejoiced on the grounds of stability.
We do not expect India to go out of favour anytime soon, even as intermittent corrections could be sharp and swift.
The long-term India story has only got more concretized on the assumption that the UPA will deliver on expected lines over the next few years.
We see ample scope for re-rating of Indian equities on the back of better-than-expected Earnings quality and growth by India Inc. going forward.
Thus, to partially factor in the same, we re-rate some of the deserving sectors/stocks, which will be the prime beneficiaries of the unfolding India story.
Also, we roll over our target prices to FY2011 basis considering that we are already in 1QFY2009 and going forward, the markets will increasingly be willing to consider FY2011 estimates while according value to companies.
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