History may repeat in another pre-poll market rally - Economic Times

Indian equities are poised for further gains in the pre-election period if historical performance of the benchmark Sensex prior to general elections are anything to go by.

The Sensex had gained 7-37 per cent in the two months prior to the election outcome date during general election years of 1999, 2009 and 2014. The 30-stock benchmark had gained nearly 11 per cent in the two months prior to election outcome in May 2014 when the Narendra Modi-led Bharatiya Janata Party came to power.

However, the index’s performance post elections has been mixed. The Sensex fell 3-8 per cent in two months after the 1999 and 2004 general elections.

However, in the aftermath of 2009 elections, when the Congress-led coalition came to power for the second time, the Sensex had gained 17 per cent in the two months after the outcome. The BSE benchmark index had gained 4.6 per cent in the two months after the Modi government came to power in May 2014. Market experts foresee more gains in Indian equities this time around before the elections as hopes of continuity in the current BJP-led government have become stronger after the recent skirmishes between India and Pakistan.

The broader market is seen gaining further as the mid- and small-cap stocks have been out of favour for over a year and are trading at cheap valuations.

ANDREW HOLLAND CEO, Avendus Capital-Alternate Strategies

Following the border skirmishes, the market believes it will help the BJP add more seats, and it may cross 273 mark. India has not benefited from the rise in Asian markets this year, so it may have more catch up to do. India is attractive on a relative basis given the weak global scenario and expectation of continuity in the government.

MAHESH PATIL Co-CIO, Aditya Birla Sun Life Mutual Fund

Market has started to factor in that the government would have a good chance of coming back. The market has not fully priced this in, especially the broader market. As the market gets more clarity, beaten-down stocks could rise more. While the Nifty may not gain much, broader market can rise further.

PRATIK GUPTA MD, Deutsche Equities India

Apart from the political outlook, a big driver for Indian equities is the relative underperformance this year versus other Asian markets, especially China. This, coupled with prospects of a stable government — instead of a weak coalition as being feared earlier — suggests more upside for Indian equities.