Modi Win a ‘Turning Point’ for Politics, Reform: Street Wrap

(Bloomberg) — Prime Minister Narendra Modi’s bigger-than-expected win in Uttar Pradesh state elections is positive for Indian equities and raises his odds of coming back with a majority government in 2019, analysts say.

CREDIT SUISSE (Neelkanth Mishra)

  • Election result is a political turning point as it helps BJP in presidential polls, signals declines in identity politics
  • Brings good governance back as a political imperative
  • Upper House prospects improve; opposition more likely to support legislative action for a while
  • State limitations seen hard to overcome quickly; years before poll results led changes show up in earnings

KR CHOKSEY (Deven Choksey)

  • Modi may push reforms including electricity, roads, building up of rural and social infrastructure
  • Will have positive influence on decisions Donald Trump will take in maintaining relationship with India
  • India may attract more than $50b of portfolio flows in FY17-18, which would drive markets higher to newer levels
  • Nifty could rise to 9,200 first and then settle down in the range of 8,750 to 9,500
  • Sectors that will outperform in 2017: financials, auto & ancillaries, commodities, industrials
  • Potential stock picks: UPL, Tata Motors, SBI


  • Indian markets are at the cusp of a sustained mega bull run; great visibility of policies for next 7 years
  • Big boost will come from targeted subsidies, public infrastructure spending, liberalized FDI, a shift from unorganized to organized players
  • Recovering global macro, stable Indian economy is a positive mix even at high valuations
  • Rural consumption themes, suppliers of consumer financing, suppliers to infrastructure and power sectors, staple and durable consumption sectors will benefit
  • Top sectors financials, auto, FMCG, cement, power equipment suppliers and durables companies

EDELWEISS (Kapil Gupta)

  • Increases Modi’s chances of coming back to power with full majority in 2019
  • Election win along with improving global growth, should keep markets buoyant
  • Maintain overweight in cyclicals, IT and metals

TCG GROUP (Chakri Lokapriya)

  • Implementation of populist measures announced in polls such as farm loan waiver, free laptops, zero interest loans, free LPG connections can hold back economic recovery
  • Hopes Modi’s zeal to cultivate his new target vote bank of poor and working class doesn’t lead to price and product controls on corporates
  • NOTE: Earlier, Modi Win Spurs Jump in Indian Stock Futures, Rupee Forwards