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India Strategy
Assembly Elections: Will it
break the political logjam?
Assembly elections: weak impact on markets
Over the next few weeks, India will have a series of assembly elections including
the politically important state of Uttar Pradesh (UP). The results of the elections
will be announced on March 6th. Unlike the result of the Lok Sabha elections
which have led to large swings in the market, assembly elections have historically
had a very low impact on equity markets. We think this time too markets are
unlikely to swing sharply on election day irrespective of the outcome of the
elections.
So why the assembly election results are important?
There are 2 reasons for this:
1. Confidence booster to Congress: The Congress over the past 18 months
has been hit by a series of corruption scandals and a perceived loss in
popularity. A good performance in the assembly elections will provide a
morale booster to the Congress party.
2. Improved numerical strength in Parliament: Congress hopes to be a
“king-maker” in UP and is widely expected to help a regional party (probably
Samajwadi Party) form the state government. The quid pro quo could be that
they provide unconditional support to the UPA Government at the Center.
This could help the UPA Government improve their razor thin majority. It may
be easier to push reforms in that case.
How will the parties fare in the assembly elections?
The good news for the Congress is that they have a very low base to contend with
in the 3 important states of UP, Punjab and Uttarakhand. BSP is the ruling party in
UP and BJP in Uttarakhand & Punjab with Congress being placed 4th in the UP
assembly polls last time. In the Lok Sabha elections, the Congress performed
better than the BJP in all these 3 states. Opinion polls indicate that Congress
should win the assembly elections in Punjab and Uttarakhand while it should do
better than the BJP in UP.
National Opinion Polls: UPA still losing grounds
Meanwhile India Today did their opinion poll on what would be the Lok Sabha
seat position if elections were held today. The Congress-led UPA continues to
lose ground. However, the negative news for BJP is that they are not gaining too
many seats. The gainers are the regional parties. If the opinion poll proves to be
correct, this could mean both the Congress-led UPA as well as the BJP-led NDA
will need to seek more coalition partners ahead of the next elections in 2014.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Strategy
Assembly Elections: Will it
break the political logjam?
Assembly elections: weak impact on markets
Over the next few weeks, India will have a series of assembly elections including
the politically important state of Uttar Pradesh (UP). The results of the elections
will be announced on March 6th. Unlike the result of the Lok Sabha elections
which have led to large swings in the market, assembly elections have historically
had a very low impact on equity markets. We think this time too markets are
unlikely to swing sharply on election day irrespective of the outcome of the
elections.
So why the assembly election results are important?
There are 2 reasons for this:
1. Confidence booster to Congress: The Congress over the past 18 months
has been hit by a series of corruption scandals and a perceived loss in
popularity. A good performance in the assembly elections will provide a
morale booster to the Congress party.
2. Improved numerical strength in Parliament: Congress hopes to be a
“king-maker” in UP and is widely expected to help a regional party (probably
Samajwadi Party) form the state government. The quid pro quo could be that
they provide unconditional support to the UPA Government at the Center.
This could help the UPA Government improve their razor thin majority. It may
be easier to push reforms in that case.
How will the parties fare in the assembly elections?
The good news for the Congress is that they have a very low base to contend with
in the 3 important states of UP, Punjab and Uttarakhand. BSP is the ruling party in
UP and BJP in Uttarakhand & Punjab with Congress being placed 4th in the UP
assembly polls last time. In the Lok Sabha elections, the Congress performed
better than the BJP in all these 3 states. Opinion polls indicate that Congress
should win the assembly elections in Punjab and Uttarakhand while it should do
better than the BJP in UP.
National Opinion Polls: UPA still losing grounds
Meanwhile India Today did their opinion poll on what would be the Lok Sabha
seat position if elections were held today. The Congress-led UPA continues to
lose ground. However, the negative news for BJP is that they are not gaining too
many seats. The gainers are the regional parties. If the opinion poll proves to be
correct, this could mean both the Congress-led UPA as well as the BJP-led NDA
will need to seek more coalition partners ahead of the next elections in 2014.
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