Stock markets are likely to open and remain on a strong note on Monday with the State election results confirming gains by Bharatiya Janata Party (BJP), the country’s main opposition party.

The leads/trends in four of the five States that held elections over the past month are mostly in line with the exit polls, say stock market experts.

This is likely to give momentum to BJP in national elections next year, feel economy observers.

The stock markets had post the exit polls priced in the likely outcome of the Assembly poll results, Jagannadham Thunuguntla, Head of Research, SMC Global, told Business Line here on Sunday.

But Monday could see the stock indices continue with its recent strength going by the positive news coming from the US on the taper issue and also the latest Assembly poll outcomes in India, it was pointed out.

Thunuguntla said it was difficult to extrapolate the latest Assembly poll outcomes into the general elections 2014.

“But one thing is clear. Markets don't like coalition. It would like to have a party with majority come up in 2014 so that decisions are be taken quickly.”

The benchmark Sensex has advanced near 8 per cent this year.

Foreign investors have poured in about $18 billion in the Indian stock markets this year. They bought net $1.1 billion of stocks in November, the third monthly inflow.

For markets to rally sustainably, there is need for an improvement in the fundamentals, say several capital market observers.

Indian economy has been on a better wicket in the recent months after several initiatives from the Centre in terms of attracting foreign resources and keeping the battered rupee on a tight leash.

The area where policymakers failed miserably was on inflation control, economy watchers said. Indian economy recorded its slowest growth in a decade last fiscal.

srivats.kr@thehindu.co.in

(This article was published on December 8, 2013)
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