The Hindu Business Line : Market players unsure; await poll results

DARK clouds overthe Mumbai skyline in the past few days not only indicate the untimely monsoons, but also reflect the looming uncertainties in the domestic financial markets due to the changing political climate.

Even as market participants and industry watchers await the results of the Lok Sabha elections, the Sensex plunged by 229.94 points. The rupee also fell by 45 paise in reaction to the exit polls, which suggest that a government with a thumping majority may not come to power.

Usually forthcoming on their views of the market, bankers and industry watchers were largely non-committal on the long-term outlooks. Some believe that the new government would decide the future course of the financial markets.

``We will witness more volatility in the next few days. Once the results are out, things may stabilise. The way things are going, we have to make an assumption that markets will remain choppy until such time that a new government is formed. If we get a government with a firm majority we can expect a significant appreciation in the rupee. If there is a hung parliament, then the rupee may fall,'' said Mr R.V.S. Sridhar,Vice-President and Chief-Dealer, Money and Forex, UTI Bank.

Politics gained centre stage today with all dealing rooms in Mumbai tuned into news channels for election results rather than the staple, business news.

Mr D Sampath Kumar, Vice-President, Foreign Exchange Market, IndusInd Bank, said, ```If the NDA Government comes back to power, the rupee will be back on the strong path. The markets may welcome a Congress Government, provided reforms are taken forward. But the worst possible scenario would be that of a Third Front forming a government. This could even lead to an FII pullout from the equity markets and the rupee reversing its trend and staging a dip vis-à-vis the dollar.''

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