BJP’s landslide victory will take the Indian equity markets to new highs! The state election results surprised even the optimists, while BJP victory in UP was being factored in by the markets, the scale of victory came as a positive surprise.
This success will bring stability to the government in the centre. We will see more pro-growth policy changes in the coming days. Thus this a very positive moment for India at large and the equity market in particular.
We will see reforms taking pace.
The government will able to reduce corruption and take more steps toward that direction.
Implementing GST will be easier, as there be no further resistance.
Fiscal prudence maintained as the same gets rewarded.
Will this rally continue in the short term? Will the Fed interest rate rise spook the rally?
The market may take a breather after today's rally. While the long-term outlook looks extremely confident, earning have to improve to catch up with valuations. This gap between the long-term macros and short-term earning growth will need to be reconciled. We will also find the reduction in liquidity with US interest rates moving up.
Long: Banking stocks, IT ( At these levels all long positions need to have strict stop losses )