Strong governments resonates happy markets:
As we all know, markets cheer when there is a government with a clear majority. It will be even cheerful if a single party government. This was the primary reason for the big fall that market witnessed on the election results day.
The markets had priced in a clear majority for NDA and markets shed that extra premium when NDA missed the estimates.
As the election results have already been digested by markets, I think it will wait for the budget session which is a key event for the market. However, we need to see how the government is going to decide on economic policies in the upcoming union budget.
The number of seats won by BJP indicates that there may be some major changes in the policy.
I expect there will be some publicly funded government infrastructure projects that will be either suspended for the time being or called off. Government may give more emphasize to the revival of rural consumption by putting more money into the hands of low-income families that could lead to revival in consumption theme and agriculture-sector.
Well, these are only expectations, we will have to wait until the next budget to understand how government is planning on its economic policies.
