See short-term upswing before focus shifts to taper: Advent

The mood in the market could be upbeat for the next few sessions, but the focus will then shift to other pressing factors like the impending Fed tapering, says Advent Advisors’ KR Bharat.

Also, the ruling coalition may decide to play it safe for the remainder of its term. Rather than puruse any aggressive reforms, it will try to avoid doing things that could push inflation higher, Bharat said in an interview to CNBC-TV18. “I think the 2014 election is going to be decided between the ages 18 and 30 and not by over 30 years of age. I think they will decide who forms the next government,” Bharat said. Also read: Whether it's UPA or Modi, here's how to invest in 2014 Excerpts of his interview on CNBC-TV18  Q: What is your sense do you think the markets can go gung-ho in anticipation that we are at least not going to get a third front? What will be the market reaction?  A: The market had discounted a 4-0 result post the exit polls and what has come out is pretty close to what the market has discounted but the trend is very clear. How long will the markets continue to rejoice on this event because the general elections are in May. So this will have an impact on the market maybe Monday, Tuesday, maxi mum Wednesday and then it will find other things to focus on. For example in January it will start worrying about tapering. However, there are lots of important takeaways from these elections. From a market and overall perspective, the question that arises is – what do you think the central government is going to do between now and May? – Do you see them saying for the next four months we will focus only on economic reforms, and focus on unplugging all the bottleneck that are there and we are going to do the best we can for the economy. Are they going to say – we will deregulate petrol and diesel prices. Or will they say, we will do nothing that can nudge inflation higher, we are not going to touch petrol, and diesel and we are not going to go anything that is controversial. Sadly, I see the later situation panning out and the market will have to start focusing on that data.  Politics will not come back to center stage in March.  Q: Will this results tell the current government that populism is not working, maybe better economic policy will work? A: I don’t know if it will give them that lesson but it should give all political parties that lesson. I think the 2014 election is going to be decided between the ages 18 and 30 and not by over 30 years of age. I think they will decide who forms the next government. The message is coming loud and clear, particularly from Rajasthan is – “We don’t want freebies, we want economic growth and we want you to create jobs.  Takeaways from Delhi are we don’t like inflation we don’t like the law and order situation and we will punish you for it. This is the takeaway that we are taking from it, what takeaways the politicians take I don’t know. I just hope that the takeaway that they get whet ether it is Congress, BJP or regional parties is that ‘Good economics is good politics’. Now we are not appealing to those between 50-60-70 year olds but to those between 18-30 years of age for whom good economics will be good politics.