Morgan Stanley Outlook: Bullish Rationale: Any wave of populism from the Congress is unlikely, rather it could lead to efforts to consolidate the fiscal. They add that the risk of mid-term polls is low and the market could be rangebound ahead of the key events next week. The Nifty may be coming to the end of its correction and they remain focused on stock picking.
UBS Outlook: Bullish Rationale: Govt's stability is unlikely to be impacted adversely and it may not sacrifice fiscal consolidation with a populist budgets. They feel the government could start expediting project implementation. They are positive on the market as valuations are supportive coupled with monetary easing & earnings bottoming. However major reforms may remain elusive.
CITI Outlook: Cautious Rationale: Consensus would suggest the Congress will get more cautious; i.e. effectively hand out more sops resulting in further fiscal slippages and move further away from reform – a mix that will be negative for the Macro. This is not necessarily the case – the Congress could well be much more forceful with reform given that back peddling on them does not seem to be paying electoral dividends for now.
JP Morgan Outlook: Cautious Rationale: The relatively light political calendar represents the best opportunity to consolidate the fiscal situation. But the government’s resolve to make tough decisions could be severely tested against the current backdrop. Investors need to position for volatility and stay hedged in the market.
Bank of America Merrill Lynch Outlook: Bearish Rationale: After the election results, the Congress will need to be more accommodative of the views of regional parties now. They feel reforms like GST, FDI in retail, may take longer than expected. They think the market will correct in the near-term and will watch out for a CRR cut and the Budget next week.