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May 2014
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The centre-right Bharatiya Janata Party-led coalition won the Indian general election in a landslide victory on Friday, installing Narendra Modi as the nation's new prime minister.
Rowe Price global head of fixed income Arif Husain said strategists at that firm hope that a majority BJP government will be able to unlock India's potential. "For long-term investors India is undoubtedly the most attractive market out there and we think investing in equities will be the best way to gain," Mr Husain said.
Mr Modi, a longstanding chief minister of the state of Gujurat, is well regarded for his role in that state's economic development and considered an advocate for business. He has pledged to push through reforms to the taxation system, deregulate many industries, and launch a massive infrastructure spending spree.
Global investment banks scrambled at the weekend to lift their official forecasts for India's gross domestic product growth and equity market targets.
Economists at Japanese investment bank Nomura have called Mr Modi's win: "A game-changing election outcome that reinforces our view that the economy is at an inflection point."
Nomura lifted its GDP growth forecast, from less than 5 per cent this year, to 6.5 per cent for the Indian financial year ending March 2016.
Economists at French investment bank BNP Paribas dubbed this, "India's Reagan-Thatcher moment," as they raised their end-2014 Sensex target from 24,000 to 28,000 points.
India's two major sharemarkets have each added about 23 per cent since the BJP announced Modi as its candidate in September, spiking over May as he pulled ahead in exit polls.
Shortly after 5pm (AEST) on Monday, both the Nifty and Sensex indices were up more than 0.8 per cent for the session at 7259 points and 24,314 points respectively.
"This is the beginning of a considerable bull market in Indian equities," Bell Asset Management chief investment officer Ned Bell said. He was in Mumbai on Friday as the election result was announced to meet with the management teams of some Indian companies he is considering investing in.
"Because of the BJP's clear-cut victory, the mood among corporate leaders in India is bordering on euphoric," Mr Bell said.
Platinum Asset Management's Asia Fund already has about 20 per cent of its assets allocated to Indian shares. The fund's co-head Joseph Lai is even more bullish now that the BJP has achieved a strong majority. "The strength of the win means Modi should be able to implement the necessary reforms. Economic growth and consumer spending are set to rise," Mr Lai said.
Fidelity Asia Fund portfolio manager David Urquhart began moving more money into Indian stocks in February ahead of an expected win by the BJP. He expects an improvement in corporate earnings to begin to flow through in early 2015 following the first slated reforms to tax and labour market rules.
India is one of Australia's major trading partners, but strategists are not tipping the predicted boost in its economic fortunes to have much direct benefit for ASX-listed companies, at least in the next few years. Overall, revenue from India is immaterial to Australian company earnings.
Something local strategists remain alert for is any move to lift restrictions on Indian coal and iron ore exports that could change the global pricing of Australia's biggest earners.
The centre-right Bharatiya Janata Party-led coalition won the Indian general election in a landslide victory on Friday, installing Narendra Modi as the nation's new prime minister.
Rowe Price global head of fixed income Arif Husain said strategists at that firm hope that a majority BJP government will be able to unlock India's potential. "For long-term investors India is undoubtedly the most attractive market out there and we think investing in equities will be the best way to gain," Mr Husain said.
Mr Modi, a longstanding chief minister of the state of Gujurat, is well regarded for his role in that state's economic development and considered an advocate for business. He has pledged to push through reforms to the taxation system, deregulate many industries, and launch a massive infrastructure spending spree.
Global investment banks scrambled at the weekend to lift their official forecasts for India's gross domestic product growth and equity market targets.
Economists at Japanese investment bank Nomura have called Mr Modi's win: "A game-changing election outcome that reinforces our view that the economy is at an inflection point."
Nomura lifted its GDP growth forecast, from less than 5 per cent this year, to 6.5 per cent for the Indian financial year ending March 2016.
Economists at French investment bank BNP Paribas dubbed this, "India's Reagan-Thatcher moment," as they raised their end-2014 Sensex target from 24,000 to 28,000 points.
India's two major sharemarkets have each added about 23 per cent since the BJP announced Modi as its candidate in September, spiking over May as he pulled ahead in exit polls.
Shortly after 5pm (AEST) on Monday, both the Nifty and Sensex indices were up more than 0.8 per cent for the session at 7259 points and 24,314 points respectively.
"This is the beginning of a considerable bull market in Indian equities," Bell Asset Management chief investment officer Ned Bell said. He was in Mumbai on Friday as the election result was announced to meet with the management teams of some Indian companies he is considering investing in.
"Because of the BJP's clear-cut victory, the mood among corporate leaders in India is bordering on euphoric," Mr Bell said.
Platinum Asset Management's Asia Fund already has about 20 per cent of its assets allocated to Indian shares. The fund's co-head Joseph Lai is even more bullish now that the BJP has achieved a strong majority. "The strength of the win means Modi should be able to implement the necessary reforms. Economic growth and consumer spending are set to rise," Mr Lai said.
Fidelity Asia Fund portfolio manager David Urquhart began moving more money into Indian stocks in February ahead of an expected win by the BJP. He expects an improvement in corporate earnings to begin to flow through in early 2015 following the first slated reforms to tax and labour market rules.
India is one of Australia's major trading partners, but strategists are not tipping the predicted boost in its economic fortunes to have much direct benefit for ASX-listed companies, at least in the next few years. Overall, revenue from India is immaterial to Australian company earnings.
Something local strategists remain alert for is any move to lift restrictions on Indian coal and iron ore exports that could change the global pricing of Australia's biggest earners.
