Weekly Watch -THE NATION VOTES FOR STABILITY

After the fractured mandate that the exit polls had thrown up, the election results will pleasantly surprise the markets. At the time of writing this report, we just have the leads and the UPA is leading in 256, while the NDA is leading in 166. This lead is unassailable. The markets will like this.
These are my submissions
* There will be continuity of policies
* The UPA will not need the crutches of the Left.
* Therefore, will be able to carry out whatever reforms it wanted to do
* The markets will open with a huge upward gap, likes of which has never been seen or heard in our markets. We could even hit the upward circuit breaker.
More investors are outside of the markets, waiting to enter. Some will pay a hefty price and enter. Others will remain spectators. On the FII front there was ample money waiting to come in once the event was over. This verdict re-assures the global investors of the continuity of the policies accompanied by more reforms. The FIIs will now rush in.
While India specific money will have no option but to enter now, the money demarcated for the emerging markets can go to other countries in the basket where the markets are reacting.
The global rally in stocks seems to be coming off. The S&P 500, the Dow and the Nasdaq Composite all retraced their steps on a weekly basis. The Nasdaq infact, ended its nine week running streak. This is something that can effect our markets, once the markets do a mandatory jig Monday.
As a new Government is formed, it does have the potential of giving a further fillip to the markets by various announcements. After the initial euphoria dies down the markets will correct a bit and soon expectations about the budget will start building.
Our idea of investing in PSUs, advised with NDA in mind, holds true even with UPA in power. Nothing stops the UPA from doing what it wants in the sector now. The only constraint it has is its own imagination.
With left doing a vanishing act, the Nuclear Deal is intact and power stocks will do well. Power also find mention in the Congress Agenda. So this is the sector that will see more action.
Infrastructure and Real Estate will see improved valuations as the funding problems get solved and the sectors get re-rated.
The pending bills in the parliament, kept in the cupboards to save them from the wrath of the Left, will be dusted off and brought back to vote. So you could see FDI limits being raised for Insurance and Banks being restructured.
More importantly, rising tide will raise all boats. So 99% of the stocks will shoot up with no immediate change in fundamentals.
For someone who is outside the market, its going to be painful entering the markets, but there is little choice.