Brace For A Re-rating - India Votes For Stability And Development
The Indian voter has thrown the biggest positive surprise in the 2009 General elections. The recent election results are momentous from India's perspective, because after many years we are getting a stable government at the centre. The number of seats won by the Congress also gives it overwhelming clout within the coalition.
Third Front 67
Other Parties 30
Fourth Front 27
* Source Election commission, IBN Live
The incumbent Congress led UPA surprising most pre poll analysis and exit polls, have managed to get an almost near majority. As they say in Bollywood, "Singh is King"; it is the return of the economist turned central banker turned finance minister turned Prime Minister, Dr Manmohan Singh, to continue on a much stronger platform. An important point to take note is that this coalition is of fewer like minded parties (8 parties) compared to the previous one (15 parties), so fewer moving parts. The composing parties of the UPA don't have any ideological differences either on a social front or an economic front and hence implementing its agenda would be easier. The Communist parties (Left front), whose support was critical for the better part of the tenure of the last government and which often came in the way of economic reforms, have been marginalised and most likely will have little say in how the government is run or its policies implemented over the next five years.
UPA's performance, especially that of the Congress in elections 2009 is the strongest ever shown by a single party in national elections since 1991.
Implication for Equity Markets
While primarily driven by the reversal of liquidity, the fall in the Indian equity markets since the beginning of 2008 was also driven by the frictions that had begun to show up in the coalition of diverse parties where the Left front was critical for survival. Uncertainty over global and local factors made India, one of the worst performing markets in 2008.
Investors like certainty. With this decisive mandate, one of the major challenges and risks, political uncertainty, facing investors looking at the Indian market is now behind us.
While we continue to face uncertainty and challenges arising out of global financial markets and the jury may not still be out whether this is a bear market rally or a start of a new bull run, with this decisive mandate, one of the biggest worries of investors in India on political uncertainty is behind us. This change is unlike a quarterly surprise or a near term positive but in fact is a medium to long term positive.
Valuation and Earnings expectations-
India's valuation premium of the recent years had significantly contracted in the past twelve months on the back of a combination of global and local uncertainties translating into higher relative risk premium. We expect Indian equities to witness re-rating, driven by the outcome of this election (implying lower political risk) and hence we expect the base P/E to move up to 14-15x.
Consensus earnings expectations for the market have been substantially revised downwards in recent times, with the BSE Sensex earnings forecasts lowered ~30% (from peak estimates in Jan 2008) in line with downward revisions in GDP forecasts from ~8% to 5.5%. The pace of downward revisions of FY10 earnings has considerably abated and reversed to substantial upgrades in certain sectors post the recent Jan-March 2009 corporate results. Moreover, we could see earning upgrades during the course of this year on the back of acceleration in economic and social reforms, higher foreign investments, improved corporate and consumer confidence and increased investments in infrastructure. Sectors we believe can gain the most in the immediate term could be:
1. Sectors dependant on liquidity for growth: Realty, Retail & Infrastructure
2. Beneficiaries of improved demand dynamics in the rural economy: Consumer products, automobiles and cement.
3. Revival of the corporate CAPEX cycle: Capital goods, engineering and construction
4. Reform-led sectors: Power, Retail, Telecom, Banking, Insurance and selective public sector enterprises on possible disinvestment.
Sectors that may likely be disadvantaged in the near-term, mainly due to an appreciating INR include technology, commodities and pharmaceuticals.
|5 Good Reasons to Get a Masters
Accounting continuing education useful information
An Internet Business Education
An Overview Of The Better
Apa Continuing Education
Are Accredited Online Colleges
Business Executives Meet The Demand
Business School Excellence In Business
Changing Your Everyday Through
Comboapp Introduces Purely Scalable
Continuing Education Online
Continuing Education Something for Everyone Education
Continuing Education for Counselors Benefits
Counseling Continuing Education Requirements
Does Free Continuing Education
Experience The Convenience That
Get Finance For A Business Education
How Online Training is Changing
How To Become A Florida
Insurance Continuing Education Online LTCI
Keep Abreast Of Your Online
Learn More about Concepts
Making Or Selling Business Versus
Management Continuing Education for Professional Engineers
Massage Therapy Continuing Education Will
Mental Health Continuing Education Degree For Prevention
Mental Health Continuing Education Options
Nursing Continuing Education A Must Have
Nursing Continuing Education Courses
Nursing Continuing Education Facts Education
Online Driver Education Vs In class
Online Driver’s Education A Convenient
Psychology Continuing Education Classes
Psychology Continuing Education Courses
Psychology Continuing Education For Teachers
Reasons To Take Continuing Education
Role Of India Ngo In Imparting
Social Work Continuing Education Information
Stay Current With Nursing
The Importance Of A Quality
Using Continuing Education Loans to Help
Where Can I Get Free
Work From Home Moms And Continuing
Your Resume Education Section Top Or Bottom
All In The Family Australia Must Meet Its Obligations Bidding For The 2012 Summer Olympic Bingaman Quitting From Congress Brace For A Re rating Case Study Increasing The Popularity ( Or Votes) Celebrities And Bidets Circle Of Fame Ring Boulevard
Communicating Democrats Agenda Dr Rodney Howard Browne And The Great Election Candidates And How To Win A Election Results And Television Expect Instant Results With Gay Conservatives General Election 2010 – Castle Get Sirius With Howard Stern Hello Scott Brown Goodbye Filibuster Howard County Real Estate
New Jersey Breaks Record Obama Narrows Gap Clinton Obama Polls Can They Part 3 Asset Protection General limited Rocking The Vote Makes Everyone Win Shake The Dust From Off Thy Feet Social Bookmarking Sites Significance Sun Protection For Everyone The 2006 Elections What The Different Types Of Delaware The Followers Safe System By Rodney The Howard Stern Podcast Problem The Nation Votes To Bring Back The Potential Of Ps3 Games Console The Top 10 Most Think It Over By Rodney Trust Protector The Powers Voting Machine Voting Process What Do You Want What Happens When Individual Investors Where can I travel in South Will Healthcare Reform Cost Democrats Will The Real Barack
A Career in Restaurant Management Careers A Effective Catering Firms A Fresh Perspective towards Chinese Apple iPad for restaurants Are you looking for Buffets Boost Your Hotel Business With Reservation Boost your bottom line Business Software Adding Efficiency To Business Catering Software Makes Every Aspect of Running Celebration catering small business Entertainment Corporate Catering Ideas for Your Next Event Software gives event Get Wonderful Experience With Offsite Catering Healthy Restaurant Choices Eating Nutritious Meals Hotel Reservation Software Computers Software Hotel Reservation Software Give New Meaning Hotel Reservation Software Instant Hotel Reservation Software One Software Multiple Hotel Reservation Software One Software How To Open A Restaurant How the Catering Softwares How to Develop Your Restaurant Importance of Hotel Reservation Indian Food Restaurants Revival Kids Eat Free Restaurants Know About the Facilities One Piece of Software that any Hotel Online Hotel Reservation Software for Efficient Online Restaurant Management Career Training Options Opening A Restaurant 7 Vital Opening A Restaurant Business 3 Important Party Catering Food Premium Catering Caterer Ideas on Deciding Reasons for Buffet Catering Singapore Restaurant Catering Software Find Excellent Restaurant Restaurant POS software Fort Restaurant Reservation System A CustomerS Selecting a Fantastic Industrial Cleansing Assistance Special Upcoming Events at Restaurants The Advantages you can Get from The Popularity of Restaurant The Significance Of A Good Catering The way the Catering Softwares Are Supporting Tips About Discovering the Right Tips on How to Start a Restaurant Tourism Administration Reflects Canadas Tourism Try Catering Software in Your Catering Understand the Online Advertising Strategies for Your
Thank you to Shelley for the reminder that Howard Dean will be appearing on ABC.
All rights Reserved © 2007-2011.