Nilesh Shah, MD & CEO, Kotak Mutual Fund said “Removal of political uncertainty is always welcome from a market point of view. Current mandate shows the maturity of voters in choosing a stable government Now with that uncertainty behind market will focus on steps taken by the Govt to encourage investment and give a push to consumption, which is hitting a soft patch.”
The market is looking at the second term of Modi Sarkar to build on the foundation laid in the last term. India has good macros in the form of low inflation, better tax compliance, fiscal prudence, high FDI, and manageable current account deficit if oil remains at current levels.
Now the market believes that stage is set for accelerating growth to more senior level by tackling certain challenges like the revival of investment and support consumption growth. Changing the orbit of Indian GDP growth from the current 7% level to higher level (eventually to aspirational double-digit growth) is what markets are expecting from the second term of the Govt.
Markets are pricing in double digit earnings growth over the next few years. From a risk-reward point of view, the market is delicately balanced. The direction of the market will depend on the steps that the government takes to accelerate growth.”
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