A tally above 300 for the National Democratic Alliance (NDA) is good news.
This is what the market was hoping for. The budget NDA government put out last time will help consumption, but I think the new government needs to now come back with extra measures, which will help kick-start the economy without going overboard on the fiscal deficit. If the new government can do that, that is kick-start the economy again, then I think the markets
will go higher. In doing so, I don’t think the markets
will mind if there are minor slippages.
The growth is slowing and the trade war is becoming a lot more than what it initially was. So, India will be seen as a safe haven in the global context. Therefore, it will be good if we can get the domestic economy moving. Overall, on a sector-wise basis, this will be good for banks and industry as a whole. I have always maintained that whoever gets a majority, needs to get the private capex cycle moving – and that will be the key thing to watch out for.
The kind of majority Bharatiya Janata Party (BJP / NDA has got will give corporates the confidence as regards a revival in economic growth. in this backdrop, I like private banks. That said, one needs to see the recapitalisation of public sector banks (PSBs). Now that the elections are over, the new government can think about mergers in the PSU banking space.
The Bank of Baroda (BoB) experience has not been too bad. That apart, infrastructure sector will continue to be priority for the government. So, cement, capital goods sectors should do well. Private capex cycle should pick-up in the second half of the year. I now think that the Reserve Bank of India (RBI) still has the opportunity in June to cut rates and that will also help the economy and the consumption space.