How will mkts react to govt's nuke deal move?

After Left withdrew its support to the UPA government, the question arises how is the market likely to perform in the run up to the confidence vote? Deven Choksey of KR Choksey Securities believes that if the nuclear deal of the government is supported, it is going to infuse the confidence into the global investors. He said, “The first measure from the FII will stop and gradually money will flow into the Indian market, which is going to be the road path ahead. We are going to see the kind of upside in the market in subsequent date from now onwards.”

Excerpts from CNBC-TV18’s exclusive interview with Deven Choksey:

Q: We have gotten off a little lightly today, it seems from all the permutations and combinations of the calculations that have been done, that this government should be able to make it through the trust vote and will have adequate numbers on its side. How do you expect the markets to react over the next few weeks and may be in the next month, as we go towards the trust vote our political developments being factored out of the markets?

A: This is the thing that we all wanted because the kind of an uncertainty in which our market was in because of this Left Party’s pressure on the government is practically gone away. At the same time the Samajwadi Party is openly declaring that they are going to support the nuclear deal of the government.

If the nuclear deal of the government is supported, it is going to infuse the confidence into the global investors. The first measure from the FII will stop and gradually money will flow into the Indian market, which is going to be the road path ahead. We are going to see the kind of upside in the market in subsequent date from now onwards. Clarity is absolutely important and it has come at the right time.

Q: It is a bit of a relief for the market to see the Left out of the government formation actually isolated in some ways. But it is any better to have the Samajwadi Party come in as a partner to this government because they have not yet been in and have already been making demands for key changes to the cabinet members. They have mooted proposals such as the withholding tax, so which one would be a better enemy to fight?

A: It’s a trick; may be they have felt the withholding tax on the oil companies. But, it is not an easy proposal to drag. At the same time, if you look it across it is not making any sense to tax them because they are not collecting much money. At this point of time, it is too early to take a call but some amount of reconciliation would take place on the demand and things would come down. I don’t want to take that fear that they will probably come and ask for the windfall tax from the oil companies.