Election results boost Indian stock market 17%

The first time the stock index touched the auto stop mechanism because of a decisive victory in India's general election last weekend by India's ruling Congress party-led coalition, it is expected that India will have a stable government and that its economic and market reforms will be pushed forward. 　　By this effect, the Indian stock market 18th, the opening of a rally, the first time in history to touch the auto stop mechanism, and two suspension of trading, the Indian stock market closed up more than 17%. Mr Singh's second prime minister, Manmohan Singh, announced 16th that the Joint Progressive Alliance led by the National Congress of India has won the election of the Indian People's House (lower house). Previous polls have shown that there may be only a few gaps between the two major coalition parties. This assumption has led to a gloomy market expectation that the Indian Parliament will be in a close position, possibly creating a fragile coalition of ruling factions. India is a federal state with a bicameral legislature, divided into the Bundestag (upper house) and the People's Court (the lower house). The Indian people's court elections are held every 5 years, and the political parties or coalition parties that win the majority in the people's Court elections have the right to form a cabinet. The Congress will again lead the cabinet, the current Prime Minister Manmohan Singh to become prime minister again a few foregone conclusion, the new government will be completed by June 2 before the cabinet.　　Investors believe this will lead to coherent policies and stable government, and will push for key economic and entrepreneurial reforms. Analysts point out that the only reform that the Coalition has so far worth mentioning is to allow foreign direct ownership of a 51% per cent stake in a single brand retail company. Some of the reforms that the market has not yet introduced include opening up the banking sector to foreign direct investment, raising the cap on foreign-owned insurers from 26% to 74%, and allowing pension funds to invest in equities.　　The reform measures that the market will pay close attention to include: opening up banking, insurance and retailing to foreign direct investment, agreeing to sell shares in state-owned companies, and letting go of petrol and diesel pricing. Foreign investment is expected to be heavily affected by the election results, India's Mumbai stock market Sensex index rose more than 10% in the opening 18th, the main stock index suspended trading for 2 hours.　　The stock market surged 17.3% to 14,282 points after resuming trading, again hitting trading restrictions, and the Bombay Stock Exchange announced that it would suspend trading for the remainder of the day.　　The election results are good news for the market and we see a strong influx of foreign capital into India, said Arun Kejriwal, founder and managing director of Kejriwal & Investment services PVT. Analysts said there was still room for further gains in the market as local funds were expected to reinvest in the stock market. Some expect the Indian stock market to move higher in the next 3-4 months. Deven Choksey, managing director of K.R Choksey Securities, predicts that prior to the publication of the Indian federal budget in July, SenseThe x index will also move higher. Morgan Stanley released its report on the day, raising its target for earnings forecasts and Sensex indices for Sensex index components. The company expects the total earnings of the Sensex index to grow by 2.5% in the current fiscal year, which was expected to shrink by 10%.　　The company also raised the target of the Sensex index to 15,300 points in 2009. Morgan Stanley said in its report that India's economic growth forecast for the 2010 fiscal year had been raised to 5.8% per cent from the previous 4.4%, as the country's private consumption and infrastructure spending were expected to grow. India is expected to be headed by a stable government, the report said. "We believe that with such a clear political edge, the new government will be able to speed up the pace of reform," he said. The report predicts that the new government will focus on improving public finances, accelerating infrastructure spending and increasing government resources through privatization.　　The report also raised its forecast for India's economic growth for the year 2010/11 from 6.2% to 6.8%. But some market insiders have warned that the Indian market may usher in a consolidation period after initial euphoria, and that the federal budget, released in July, could provide long-term guidance to the market.