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The firm, in its India Strategy memo, explained that with elections commencing later this week, the focus is on the policies likely to dominate the narrative for the next five years. They note that the NDA is widely expected to retain power,
“We believe that the role of the government in driving economic growth will likely diminish in the next five years as the ability to spend is increasingly limited by fiscal deficit constraints,” Bernstein stated. “Hence a lot rests on private sector spends, FDI and FII flows (helping fund corporates).”
“From a market perspective, continuity is required for stability, and anything new emerging in the 100-day agenda post-elections planned by NDA will be a key aspect to watch,” the firm added.
Furthermore, with equity markets largely pricing in an NDA win, it is expected that there will be no major euphoria post-elections. Rather, the realities of execution will become the focus of markets.
“A change of government, while less likely, will warrant a reassessment of India’s macro health as fiscal strains increase,” states Bernstein. “We expect high single-digit returns for Nifty-50 this year and retain our view.”
