What about sectors?
Will the markets want to double down on bets on sectors that have done well? Or can the markets think differently?
Well, a lot of it would depend on policies. There is a quarter of markets which says that 3.0 may bring the zing back into consumption. My bet is that there will be continuation of the past policies.
The reason is that while markets may look at the ‘BJP in power’ in five-year blocks, the BJP itself does not think like this. And the bets taken in the last five years on sectors with an infra or capex push are not short-term bets. These are long gestation sectors with a long outlay of capital requirement. My bet is that policy and markets will double down on infrastructure and capex related themes, even as consumption may make a natural comeback, led by base effect and some policy measures for rural strength.
There might be greater emphasis on making the defence leg more successful, and ensuring that manufacturing success is here to stay and thrive. And while policy does give that push when the budget speech is delivered, markets may want to bet on continued optimism on the premium multiples in this space.
Power, for example, needs circa half a trillion dollars worth of investments, and it would be difficult to think of the government taking the foot off the pedal in these sectors.
Markets aside, this verdict demolishes some of the narratives. The Noth-South divide, rich businessman gaining at the expense of the poor upsetting the voter, urban versus rural divide – all gets negated. If the nation can manage fiscal consolidation with a growth push that is strong enough to absorb the labour force of the country, then it could mean a very promising next five years for growth and for equity markets. We all hope so. Godspeed – to the new government.
