News / Asia

As Indian Market Optimism Soars, Room for Disappointment Grows

Indian stockbrokers celebrate as they watch the Bombay Stock Exchange (BSE) index on their trading terminal in Mumbai, India, May 13, 2014.
Indian stockbrokers celebrate as they watch the Bombay Stock Exchange (BSE) index on their trading terminal in Mumbai, India, May 13, 2014.
Reuters
Investors added to bets that Indian opposition leader Narendra Modi would score a decisive election win, sending markets to fresh highs on Tuesday at the same time as piling pressure on the next government to deliver swift results on the economy.
 
Exit polls for the world's biggest election indicate that voters have turfed out the coalition government led by the Congress party, which has presided over a slump in economic growth and been troubled by a string of corruption scandals.
 
More than half a billion people voted in five weeks of staggered balloting - the largest ever exercise in democracy. The vote wrapped up on Monday and official results will be announced on Friday.
 
Indian shares posted fresh record highs on Tuesday and the rupee hit a 10-month peak after the polls bolstered expectations that Modi's Bharatiya Janata Party (BJP) and its allies would clinch the 272 parliamentary seats needed for a ruling majority.
 
“The market is now kind of priced to perfection,” said Ritesh Jain, chief investment officer at Tata Asset Management.
 
Those projections may have altered expectations ahead of the actual results, according to some brokers and investors.
 
They now say that even a number of 240 seats or below, which until Monday had been widely forecast, would prove disappointing to markets.
 
Exit polls in India are notoriously unreliable and in the past two elections have overstated the BJP's seat haul, which some observers attribute to a greater willingness by urban BJP supporters to state which party they voted for.
 
The left-leaning Congress party's base tends to be poor and rural.
 
“The base for the base case has shifted and the market is now in for an even trickier Friday than it was yesterday,” Rahul Arora, chief executive officer of the institutional equities business of brokerage Nirmal Bang, wrote in an email to clients.
 
Gujarat model?
 
Investors hope Modi will drive home a pro-growth agenda the way he did as chief minister of Gujarat state, where he has enjoyed an electoral mandate that he would not have as prime minister even under the most optimistic scenario for his party.
 
Other uncertainties include a central bank governor who last week vowed to maintain his focus on inflation at a time when the BJP and its partners in the National Democratic Alliance (NDA) have campaigned on reviving economic growth.
 
India's NSE index jumped as much as 2.3 percent to 7,172.35 points on Tuesday and has soared by nearly a fifth since Modi became the BJP's candidate for prime minister on Sept. 13.
 
Some in the market warn that investors will need to see more proof that corporate earnings are on the mend before pushing  shares up much further, even as forward price-to-earnings multiples are historically inexpensive at around 15 times.
 
The rupee, meanwhile, hovered near a 10-month high and 15 percent above the record low hit in late August when India was gripped by its worst market turmoil since a balance of payments crisis in 1991.
 
Further rupee gains could prove elusive as the Reserve Bank of India (RBI) has been buying dollars in a bid to bolster its foreign exchange reserves.
 
Bond investors will focus on the RBI's monetary policy review on June 3 after central bank Governor Raghuram Rajan on Friday reiterated that he - and not the Indian government - was responsible for setting monetary policy.
 
Although Rajan is expected to keep interest rates on hold next month after data on Monday showed consumer inflation rising only a tad in April, any big uptick in food prices could trigger central bank tightening, analysts said.
 
Investors, and credit rating agencies, will also closely examine the policies of any new government at a time when the country's fiscal deficit is being contained by measures such as curbs on gold imports that may prove unsustainable.
 
“A lot needs to be done in terms of political, fiscal and economic reforms. Earnings also need to catch up,” said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance. “A lot would depend on policies and decision-making.”

You May Like

Yemen Brings US, Iran Closer to Naval Face-off

US sending two more ships to waters off coast of Yemen to take part in 'maritime security operations' More

Minorities Become Majority Across US

From 2000 to 2013, minorities became the majority in 78 counties in the United States. Here's where those demographic shifts are happening More

Japan's Maglev Train Breaks Own Speed Record

Seven-car 'magnetic levitation' train traveled at more than 600 kilometers per hour during test run Tuesday More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
New Brain Mapping Techniques Could Ease Chronic Paini
X
Shelley Schlender
April 20, 2015 7:03 PM
Pain has a purpose - it can stop you from touching a flame or from walking on a broken leg. As an injury heals, the pain goes away. Usually. But worldwide, one out of every five people suffers from pain that lasts for months and years, leading to lost jobs, depression, and rising despair when medical interventions fail or health experts hint that a pain sufferer is making it up. From Boulder, Colorado, Shelley Schlender reports that new methods for mapping pain in the brain are providing validation for chronic pain and might someday guide better treatment.
Video

Video New Brain Mapping Techniques Could Ease Chronic Pain

From Boulder, Colorado, Shelley Schlender reports that new methods for mapping pain in the brain are providing validation for chronic pain and might someday guide better treatment.
Video

Video Hope, Prayer Enter Fight Against S. Africa Xenophobia

South Africa has been swept by disturbing attacks on foreign nationals. Some blame the attacks on a legacy of colonialism, while others say the economy is to blame. Whatever the cause, ordinary South Africans - and South African residents from around the world - say they're praying for the siege of violence to end. Anita Powell reports from Johannesburg.
Video

Video Italy Rescues Migrants After Separate Deadly Capsize Incident

Italy continued its massive search and rescue operation in the Mediterranean Monday for the capsized boat off the coast of Libya that was carrying hundreds of migrants, while at the same time rescuing Syrian migrants from another vessel off the coast of Sicily. Thirteen children were among the 98 Syrian migrants whose boat originated from Turkey on the perilous journey to Europe.
Video

Video New Test Set to Be Game Changer in Eradicating Malaria

The World Health Organization estimates 3.4 billion people are at risk of malaria, with children under the age of five and pregnant women being the most vulnerable. As World Malaria Day approaches (April 25), mortality rates are falling, and a new test -- well into the last stage of trials -- is having positive results in Kenya. Lenny Ruvaga reports for VOA from Nairobi.
Video

Video Are Energy Needs Putting Thailand's Natural Beauty at Risk?

Thailand's appetite for more electricity has led to the construction of new dams along the Mekong River to the north and new coal plants near the country's famous beaches in the south. A proposed coal plant in a so-called "green zone" has touched off a debate. VOA's Steve Sandford reports.
Video

Video Overwhelmed by Migrants, Italy Mulls Military Action to Stabilize Libya

Thousands more migrants have arrived on the southern shores of Italy from North Africa in the past two days. Authorities say they expect the total number of arrivals this year to far exceed previous levels, and the government has said military action in Libya might be necessary to stem the flow. VOA's Henry Ridgwell reports.
Video

Video Putin Accuses Kyiv of ‘Cutting Off’ Eastern Ukraine

Russian President Vladimir Putin, in his annual televised call-in program, again denied there were any Russian troops fighting in Ukraine. He also said the West was trying to ‘contain’ Russia with sanctions. Henry Ridgwell reports on reactions to the president’s four-hour TV appearance.
Video

Video Eye Contact Secures Dog's Place in Human Heart

Dogs serve in the military, work with police and assist the disabled, and have been by our side for thousands of years serving as companions and loyal friends. We love them. They love us in return. VOA’s Rosanne Skirble reports on a new study that looks at the bio-chemical bond that cements that human-canine connection.
Video

Video Ukrainian Volunteers Search for Bodies of Missing Soldiers

As the cease-fire becomes more fragile in eastern Ukraine, a team of volunteer body collectors travels to the small village of Savur Mohyla in the what pro-Russian separatists call the Donetsk Peoples Republic - to retrieve bodies of fallen Ukrainian servicemen from rebel-held territories. Adam Bailes traveled with the team and has this report.
Video

Video Xenophobic Violence Sweeps South Africa

South Africa, long a haven for African immigrants, has been experiencing the worst xenophobic violence in years, with at least five people killed and hundreds displaced in recent weeks. From Johannesburg, VOA’s Anita Powell brings us this report.
Video

Video Apollo 13, NASA's 'Successful Failure,' Remembered

The Apollo 13 mission in 1970 was supposed to be NASA's third manned trip to the moon, but it became much more. On the flight's 45th anniversary, astronauts and flight directors gathered at Chicago's Adler Planetarium to talk about how the aborted mission changed manned spaceflight and continues to influence space exploration today. VOA’s Kane Farabaugh reports.
Video

Video Badly Burned Ukrainian Boy Bravely Fights Back

A 9-year-old Ukrainian boy has returned to his native country after intensive treatment in the United States for life-threatening burns. Volodia Bubela, burned in a house fire almost a year ago, battled back at a Boston hospital, impressing doctors with his bravery. Faith Lapidus narrates this report from VOA's Tetiana Kharchenko.
Video

Video US Maternity Leave Benefits Much Less Than Many Countries

It was almost 20 years ago that representatives of 189 countries met at a UN conference in Beijing and adopted a plan of action to achieve gender equality around the world. Now, two decades later, the University of California Los Angeles World Policy Analysis Center has issued a report examining what the Beijing Platform for Action has achieved. From Los Angeles, Elizabeth Lee has more.
Video

Video Endangered Hawaiian Birds Get Second Chance

Of the world's nearly 9,900 bird species, 13 percent are threatened with extinction, according to BirdLife International. Among them are two Hawaiian honeycreepers - tiny birds that live in the forest canopy, and, as the name implies, survive on nectar from tropical flowers. Scientists at the San Diego Zoo report they have managed to hatch half a dozen of their chicks in captivity, raising hopes that the birds will flutter back from the brink of extinction. VOA’s George Putic reports.
Video

Video Exhibit Brings Renaissance Master Out of the Shadows

The National Gallery of Art in Washington has raised the curtain on one of the most intriguing painters of the High Renaissance. Mostly ignored after his death in the early 1500s, Italian master Piero di Cosimo is now claiming his place alongside the best-known artists of the period. VOA’s Ardita Dunellari reports.

VOA Blogs