Elections '09: Rakesh Jhunjhunwala, Bhanshali debate

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All market experts have got a good sense of what will happen to this economy and to the stock market if the United Progressive Alliance (UPA) or the Third Front or the National Democratic Alliance (NDA) comes to power after May 16.

Rakesh Jhunjhunwala, Trader and Investor, sees the results of general elections 2009 coming in as a big surprise. According to Vallabh Bhanshali, Chairman, Enam Securities, the Third Front will come third.

Jhunjhunwala said elections are important for markets, but at present global cues are of a greater importance. Bhanshali also agrees that General Elections 2009 will not be a turning point for stock markets.

Ridham Desai, Managing Director, Morgan Stanley, said elections 2009 are very important. According to him, India's relative performance compared to other world markets hinges around these election results because it comes at a point which is quite critical to our economic cycle.

Elections 2009: What do the markets want?
Jhunjhunwala is of the view that NDA supported by Mayawati is a better option for markets.

According to Jhunjhunwala, markets are showing strength and are rallying because of sheer value, but investors are waiting for poll results. He believes May 16-30 will see high volatility in stock markets.

Jhunjhunwala stated that Goods and Services Tax (GST) is the most needed tax reform and should be introduced by April 1, 2010. Desai agrees with Jhunjhunwala that GST will be a big revenue earner for the government.

Bhanshali said any government supported by Mayawati is acceptable. According to him, a government which is stable is worse than one that does not take action. "We need to move to the agenda of nation building." He does not see markets moving up in the next 6-8 weeks.

Bhanshali is of the view that divestment of public sector undertakings (PSUs) will depend on political combinations. According to him, UPA has failed spectacularly on power and roads.

Desai believes that markets may hesitate if UPA supported by Left comes back to power. "Any government that does not promise action may evoke negative reaction from foreign institutional investors (FIIs)." He is of the view that markets will look for concrete decisions and there are more than 50% probability that markets will break out of this range.

Where do experts see markets headed?

Jhunjhunwala feels the Nifty may touch 3,850-4,000 during the year. Meanwhile, Desai believes the Sensex will range between 7,000 and 15,000 by December. He advises investors to focus on companies with good balance sheets.

Page 2: Transcript of the interview with Rakesh Jhunjhunwala, Ridham Desai and Vallabh Bhansali ...