Contrary to most pollsters’ and our expectations it’s a decisive mandate by voters in favour of United Progessive Alliance (Congress and Allies) for the fifteenth Lok Sabha.
Areas where UPA delivered - Considering significant opposition from Left several decisions had got stalled in the fourteenth Lok Sabha (2004-2009).
Some of the key things that UPA has managed to deliver include Rural Employment Act (NREGA), tax reforms (VAT) and the Nuclear Bill.
Managing fiscal deficit (tax rates could go higher in the forthcoming budget and recent tax concessions could get reversed).
PSU divestment, Tax reforms forward to GST, further social and rural reforms and increased infrastructure focus (energy, ports and airports).
Markets to trade in higher band
Global uncertainities and valuations still remain a concern. However, political risk premium, in our opinion, certainly would recede significantly with this decisive mandate.
We now expect markets to trade in a higher trading band of 9500-13000. Positive sectors to watch for would be Consumer, Healthcare, Industrial / Infra and Telecom.
Sectors such as Commodities, Oil & Gas and IT, which are still significantly influenced by global cues, in our opinion, will continue to underperform.
Cilick here for a detailed report