Indian markets rallying on demonetisation recovery and BJP victory in UP: Adrian Mowat

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Updated: March 16, 2017 12:41:52 PM

Stating that the impact of demonetisation has been less than feared, Adrian Mowat, Chief EM & Asian Equity Strategist, JP Morgan said that Indian markets are rallying on recovery from demonetisation and BJP victory in Uttar Pradesh.

Talking about the Fed rate hike yesterday Mowat said, “Sell-off in dollar and financials was seen post-Fed rate hike but I am not sure if Fed was the reason for the rally in markets yesterday”.

Stating that the impact of demonetisation has been less than feared, Adrian Mowat, Chief EM & Asian Equity Strategist, JP Morgan said that Indian markets are rallying on recovery from demonetisation and BJP victory in Uttar Pradesh. “Cyclicals in India are currently more expensive than its EM peers. I am currently neutral on India with underweight on IT and Healthcare,” he told ET Now. He also expects India returns to be in line with EMs in 2017. Talking about the Fed rate hike yesterday Mowat said, “Sell-off in dollar and financials was seen post-Fed rate hike but I am not sure if Fed was the reason for the rally in markets yesterday”.

Recently Moody’s said that PM Narendra Modi-led BJP’s win will facilitate further reforms. “The 2017 state election results in India demonstrate broad-based popular support for the Indian government’s policy agenda and will facilitate the implementation of further reforms, a credit positive for the sovereign,” it said in a statement. While the ruling NDA has an absolute majority in Lok Sabha, it currently does not have a majority in Rajya Sabha. “…the party will increase its share of seats in the Upper House (Rajya Sabha) of India’s Parliament,” it said. However, the changes will not be immediate, Moody’s said.

Meanwhile, against all odds, BJP emerged victorious in Uttar Pradesh as riding on Prime Minister Narendra Modi’s popularity the party won a historic 325 seats out of 403. These elections were a massive blow for both BSP as well Congress. BSP could win only 19 seats and Mayawati even demanded re-polling. On the other hand, Congress managed to win just 7 seats in the state which was even less than Apna Dal’s 9 seats.

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According to US experts, Prime Minister Narendra Modi has emerged as a clear favourite for the 2019 general elections. While one of the experts noted that the electoral results of the just concluded Assembly polls in five states show that the 2014 Lok Sabha election results were not an aberration, another noted that Modi would continue to lead India after 2019.

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