Change in India's leadership will turn market fortunes, say experts

The stock market is betting big on a change at the Centre, experts have been saying this for some time now. Joining the clique today was commodities guru Jim Rogers. "I'm not very optimistic about India. It's a wonderful country, but has not been managed very well for decades ... As far as the economy is concerned, the country needs new politicians," he told ET Now. "... India is doing its best to kill the gold market, trying to make sure that Indians do not buy any more gold, do not import any more gold ... So, while the Indian politicians are fooling around with the gold market, it is another reason that I am not buying," he says. Gold stock in India is estimated to be around 20,000 tonnes on the lower side and 40,000 tonnes on the higher side. Around 70% of India's gold stock is held in rural India. According to the CSO (Central Statistical Organization), gold and real estate savings in India account for about two-thirds of the total household savings, thus accounting for over 72 percent of domestic savings. Only around 3% of total savings is seen entering equities. Compared to this, gold accounts for just around 3% household savings in the West. As far as stock markets are concerned, analysts say a change at the Centre will see the markets hit new highs. In the last two general elections, that is 2009 and 2004; the stock market has seen gap moves of 18% up and 19% down, respectively. And these big moves were not reversed in a hurry. A range of 18-19% upside means the Sensex at 25,000. A change in leadership means the present main opposition party, that is the BJP, coming to power at the Centre. "If we do see a BJP-led government coming to power, you could see a big upmove in the markets," says Girish Pai, independent analyst. Just days back, Goldman Sachs came out with a report elucidating the same. "Equity investors tend to view the BJP as business-friendly, and BJP's prime ministerial candidate Narendra Modi (current chief minister of Gujarat) as an agent of change," Goldman said in its latest report titled 'Modi-fying our view ...' India is facing macro challenges in terms of fiscal imbalances, high inflation and tight monetary policy; and a change at the Centre is being viewed by analysts as a catalyst to attracting investment in the country, which they feel could happen if the BJP comes to power. "BJP and Mr Modi, in particular, have been focussed on infrastructure and capital spending in the past and a BJP-led government may be beneficial for the investment demand pick-up, in our view," the report adds. In fact, some like Manish Sonthalia, VP & Fund Manager, Motilal Oswal Asset Management, feel that a BJP win in the coming assembly polls could see Nifty running up to 7,000. In case, the BJP fails to win less than three states in these elections, he sees Nifty back to 5,000-5,500 levels. Here's what analysts have have been saying about how a change at the Centre would fare: Arvind Sanger, Managing Partner, Geoshpere Capital Management: Frankly, a Modi-led government will be positive for the market.