New Delhi: India is poised to enter its fourth wave of growth if the National Democratic Alliance (NDA) led by Narendra Modi comes to power, displacing the ruling United Progressive Alliance (UPA), according to a note by Ambit Capital.

“Narendra Modi’s potential ascension to the PM (Prime Minister) is likely to result in a renewed focus on a revival of the beleaguered infrastructure and banking sectors, on labour reform and agricultural reform, and on privatisation. A Modi-led government is also likely to roll back the UPA’s extensive social welfare policies," it said.

“This reset of policy (in terms of a greater focus on growth than on social welfare) and politics (in terms of the debate on governance and transparency taking center stage) has significant investment implications," it said.

Ambit Capital made a case for investing in Indian stocks and pointed out that seven out of the past eight general elections had been followed by positive stock market returns, with an average Sensex return of 27% per annum.

It suggested that investors should focus on the stocks of companies involved in industrial exports, mass scale consumption and light industrial manufacturing.

“Over the past decade, consumption and investment in India have never moved in sync with each other and this has created macro imbalances. The NDA’s policies have the potential to allow consumption and investment to grow in sync," Ambit Capital said.

The report argued that over the past 30 years, India has seen three waves of growth, ironically most of them under Congress governments—1985-1992, 1993-2003 and 2004-14. Each wave has begun with a political reset wherein a new party or coalition has come to power with a fresh economic ideology, which in turn has helped lift the economy and the stockmarket, it said.

Opinion polls suggest that in the coming Lok Sabha election the NDA, led by Modi’s Bharatiya Janata Party (BJP), is likely to trump the Congress party’s UPA administration that’s battling accusations of corruption by its leaders and criticism for its handling of the economy.

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