SINGAPORE (Apr 15): The Tantallon India Fund closed up 9.08% in March with the broad market outperforming the large-cap index for the first time in months, underpinned by expectations of strong earnings growth for the small-and mid-cap universe and a surge in foreign portfolio inflows into the market. The focus is now completely on the next general election (slated for April 11 to May 22) and (rising) expectations of Prime Minister Narendra Modi managing to retain a parliamentary majority.
To reiterate our stance on the general election:
- We are intensely mindful of how poorly the “markets” have done projecting election and referendum outcomes in the last five years. That said, our expectations remain centred around a Modi victory, albeit with a smaller majority than in 2014.
- A Modi “loss” would, no question, be a market dampener. However, as in previous election cycles, we would expect the markets to absorb the “disappointment” and devolve to a fundamental assessment of (i) the stability and the strength of the institutions, (ii) underlying reform momentum, and (iii) the outlook/sustainability for growth.
- The bottom line is, irrespective of the election outcome, we believe that Modi’s structural reforms have been well-institutionalised and will sustain a new investment cycle and our growth outlook.
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