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.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.