Optimism In Indian Shares May Be Misplaced

Indian shares have rallied to record highs on hopes upcoming elections will spur reforms, but the optimism may be misplaced.

The lead up to elections – and sometimes an aftermath with decisive results – has spurred solid rallies before, Deutsche Bank said in a note.

“These rallies have almost inevitably fizzled though as the reality of running a large, complex, and noisy democracy set in,” it said. “We just don’t think an election can be as big a game-changer as the markets want to believe presently,” it added.

Surveys suggest that the ruling Congress Party, the party of Mahatma Gandhi, will be unseated by a coalition led by the Bhartiya Janata Party (BJP) in the election, which is expected to start on April 7 and finish on May 12.

Markets clearly have an optimistic view of the election: The Sensex is up more than 4 percent so far this year, running ahead to record highs and bucking declines in many regional peers.

CNBC

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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu