Indian markets are riding high as investors bet that an election and new administration will cure some of the country’s economic ills.
Mumbai’s benchmark Sensex index has trounced its Asian peers in recent months, hitting a record high last week and gaining 7% since the start of the year. The rupee has strengthened too, clawing its way back from a dismal performance in 2013.
Much of the optimism hinges on forecasts that India’s 815 million voters will make Bharatiya Janata Party candidate Narendra Modi the next prime minister.
Victory for a Modi-led coalition would end the Congress Party’s dominance, and create an opening for a new government to implement economic reforms.
Analysts say India would benefit greatly from changes to its tax code, a reduction in excessive bureaucracy and more efficient agricultural policies. Momentum on these long-promised reforms stalled under the leadership of the Congress Party.
India’s potential for growth was once mentioned in the same breath as that of China. But the world’s second most populous nation and biggest democracy has failed to deliver and its economy is just a fifth the size of its Asian rival.
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.