Marketmen feel that the Moody's move to upgrade India's sovereign rating to positive from stable is just the icing on the cake, but the real releief for them is NDA's tally of 290-plus seats. And going by market reports the FIIs have already started bringing in some of the funds which they had withdrawn during the month-long election process. According to Maulik G Sharedalal at Kaji & Maulik Securities, ``since about Rs 1000 crore of stocks (net) was converted to cash by the FIIs over the last five weeks, there was undoubtedly a portion of it willing to re-enter contingent upon a favourable political mandate. That having been comfortably achieved, we did see reasonably a broad cross-section of FII interest in traditional favourites as well as the economy sensitive stocks.''

The FIIs were net sellers on Wednesday on the first day. FIIs book profits during October and November and their operations calm down during December. ``Any quantum jump in FII investments will come in the first week of January when fresh allocations are made. By then the picture will also be clear as the government would have settled down and the reforms measures initiated,'' said Nilesh Shah of Templeton.

UTI chairman P S Subramaniam expects FIIs to remain positive as the political news is coupled with the improvement in the market regulatory framework. Simon Holdsworth of ITC Threadneedle feels that domestic buying would countinue, though FIIs will watch the way the reforms programme is implemented. Many other Asian countries were carrying out industrial and financial reforms aggressively. ``India now needs to do this. FIIs might potentially switch to industrial stocks. The Insurance bill will be tabled in 100 days. What the FIIs will assess is the ability of the present government to manage a full term in office,'' he adds.

``There are still a number of undervalued stocks within the Sensex with a potential of five to 10 per cent appreciation in the next six months. However, in the shorter term of two to three months, the markets will be volatile.''

According to Gul Tek Chandani, CIO Sun F&C asset management "the market is moving up and is in a jubiliant mood but one has to be selective. I think the market will be up 25 per cent over a period of 12 months. There will be correction intermittently which should be used as buying opportunities." He expects more FIIs to enter the markets and feels that economy sectors like cement, oil and software are sectors one needs to watch out for. Abhay Aima, Vice-President (Equities) at HDFC Bank says, "this is a Vajpayee government and not a BJP government. The TDP, the second largest ally of the NDA, is a pro reform party. Hence there will be less political pressure on the government. Besides this TDP is the only party which has not faced the anti-incumbency factor. The market is clearly in a new bull phase. One can take a fresh look at banking and cement.'' As far as FII inflows are concerned they depend more on international outlook, he adds. ``Even when there was no government at the centre for the last six monthsthere was heavy FII inflow in the markets. Retail investor money will shift from public sector to mutual funds to the more active private sector funds who in turn will be able to effetively counter the FII factor.''