The BJP led NDA had a stellar performance in the elections which concluded with results declared on Friday the 16th May 2014. It was a historic win where the BJP raced to a simple majority on their own winning as many as 282 seats. The NDA alliance won 332 seats. This is the first time since 1984, that any party has won a majority on its own and also the fact that any pre-poll alliance has crossed the 300 mark.
The ruling Congress led UPA was trounced and only remnants remain. A mere three members of the Cabinet were returned by the electorate. In UP which sends as many as 80 lawmakers, the Congress survived with the mother son duo of Sonia and Rahul making the cut whilst all others lost. In Varanasi where Narendra Modi was contesting, the congress candidate was third and secured 75,000 votes against the tally of 5.81 lakhs for Narendra Modi. So strong was the rebuttal of the ruling government that the Congress party won a mere 44 seats and does not qualify as the leader of the Opposition as well. In no state has the Congress entered double digits and it was a whitewash in Rajasthan and Gujarat which send 25 and 26 lawmakers to Parliament.
The BSP failed to open its tally in UP and barring the superlative performance by AIADMK, TMC and NavinPatnaik, it was a whitewash of the other leaders. The markets as expected rose quite sharply on Friday but failed to hold on to the gains. The intraday high on the SENSEX was 25,375 while the close was substantially lower at 24,121 point. The gain for the week was 1,127 points or 4.90%. The NIFTY made an intraday high of 7,563 points and closed at 7,203 points, a gain of 344 points or 5.02%.
I believe these levels which were made as intraday highs will act as resistances for the coming couple of weeks till government formation and ministry allocation is not completed. Key areas where the new government needs to act on a war footing are inflation, corruption and clearance of stalled projects. It would be of paramount importance that the government kick-starts the economy which has stalled for quite some time.
The RBI governor would be announcing the review in June and it would be of importance to see how the old governor and the new government agree or disagree on the state of the economy. The budget is roughly eight weeks away but discussions on the budget would begin in a couple of weeks’ time. There is a decision which the government needs to take instantly on gas prices. The approach on this issue would show the governments firmness with which they handle such a sensitive issue.
The government has a mandate which is to rule and take tough decisions to bring the economy back on track. The new voters have aspirations and have risen above the traditional way of voting on lines of caste, SC/ST and community and given a thumping victory to a man who they see as one who can deliver. The country and the world are watching and if he delivers, the super power that India should be would be reborn.
The markets are very interestingly poised and the FII’s are quite happy with the outcome. There would be large investments made from Monday by those FII’s who wait till the last result is declared and they would pour in money. A strong rupee, a strong government and decision making would solve quite a few problems.
Where to invest? PSU shares other than the banking space which has run up look quite promising. Besides these companies, those involved in road building, capital goods manufacturers and companies involved with defence look good bets in the coming quarters. The rally has begun and we have a good 3-5 years to go before this new Bull Run gets over. Enjoy the run but remember you cannot fast forward your gains.
In conclusion I would like to pay the highest compliments to the architect of the BJP win to Narendra Modi and his confidante Amit Shah for achieving the impossible and delivering what they spoke about. “ACCHE DIN AANEWALE HAIN YA AA GAYE” only time will tell.