The market reacted negatively to the recent
by-poll results in which the ruling BJP has received serious setback,
especially in the state of Uttar Pradesh.
In my view, the market participants should be encouraged by
the current political trend as it will more likely:
(a)
Lend further urgency to the efforts of the government to put the things in
order insofar as the economic growth and development agenda is concerned;
(b)
Push the hardline elements within BJP to fringes.
(c)
Motivate scattered opposition to unite to make it BJP vs. the rest in coming
elections as well as in the parliament. This brings a strong (though hostile)
opposition in place to exercise necessary check and balance on the government.
This may also mark the end of fractured coalition politics.
(d) As
Amit Shah will emerge as the biggest loser after all this. His brand of
polarizing politics will face serious challenge in forthcoming elections.
Some part of the correction is also ongoing due to
jitteriness over what Fed will conclude tomorrow evening.
In my view, a change in guidance for rate hike may not be
due as yet. However, if it does happen, this could disturb markets in the short
term.
This could be a good opportunity for investors looking to
buy for long haul.
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