Markets are expected to react positively on Monday following the swearing-on ceremony on Sunday that saw most of the big names from the last cabinet making a return.
Market participants are of the view that concerns related to policy continuity have, for the time being, taken a backseat even though alliance issues will continue to impact the investor sentiments.
“Market will react positively to this as markets like continuity. While alliance issues are still ripe, the initial concerns are behind us,” said Ambareesh Baliga, independent market expert.
“The sword will continue to dangle and there will be some amount of uncertainty but from a market perspective, the volatility is expected to reduce as there are no major events lined up in the coming weeks. The next big event would be Budget,” he added.
On Sunday, a total of 72 ministers were sworn in as a BJP-led government under Prime Minister Narendra Modi – who took oath as the prime minister for the third successive term – in a star-studded ceremony that saw huge representation from both India Inc and the entertainment world along with heads of neighbouring countries as well.
More importantly, senior ministers from the last cabinet, including Nirmala Sitharaman, Amit Shah, Rajnath Singh, Nitin Gadkari, and S Jaishankar took oath on Sunday.
This assumes significance as the election results that saw BJP failing to get absolute majority on its own led to talk in the market that the BJP would not be able to move ahead with its agenda as it will be dependent on coalition partners.
“No one is questioning whether India will grow or not. One only needs to wait and watch to see whether the velocity would be similar to Modi 2.0. One also needs to remember that if the government is looking to lay the ground for long-term growth, then the first year of the third term could see some tough measures,” said Baliga.
In a similar context, a fund manager of an AIF firm said that the market will wait for some more clarity in terms of portfolio allotment though the swearing-in ceremony has settled a lot of doubts and hence volatility is expected to reduce a bit.
“Last week’s volatility was on account of the exit polls and then the actual results. Those two major events are behind us and hence one could expect some amount of consolidation at current levels. Now, the market will look for signals in terms of policy continuity,” he added wishing not to be named.
Incidentally, a market poll done by Moneycontrol last week, found that the possibility of policy paralysis and an earnings slowdown were viewed as the biggest risks to markets in the coming months.
Also Read: MC Market Poll: Most experts predict further dip in Nifty but year-end closing near current level
On the other hand, a majority of respondents said that the market could rally if factors like political stability, along with policy continuity and earnings growth, are visible in the near future.
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