The Hindu Business Line : Market reconciled to new alliance at Centre

ON the eve of results of the 14th Lok Sabha elections, the stock market now appears to be reconciled to the possibility of a new alliance, in which the Left may be sharing power with Congress at the Centre.

"Heavens would not fall if the Left figures as a strong alliance partner in a Congress-led government," commented Mr Rakesh Jhunjhunwalla, arguably one of the largest investors and the poster boy of the longest bull run in the domestic market. "After all, the Left has been running the Government and reforms in West Bengal," he pointed out.

Mr Gul Teckchandani, CIO of the Sun F&C, felt that the market may take a few days to find its feet in the event of a change-over, and throw off its apprehensions regarding continuation of second generation economic reforms.

Mr Ramesh Damani, a BSE member and vociferous advocate of reforms and bull market, said that key indices had already factored in possible negatives in terms of piecemeal divestments and slowdown in aggressive labour reforms.

Mr Damani, however, said the crucial elements that could influence the market in the near future would be the forthcoming Budget proposals and appearance or absence of stability in the political regime that may come to power.

He also felt that privatisation was already off the cards. "What we can expect may be offer for stake sale in certain PSUs," he added. Mr Jhunjhunwalla thought that priorities and calibration might change in terms of disinvestments but ruled out destabilisation in the process.

Mr Teckchandani observed that labour reforms allowing corporates to set up and wind up shops in relation to returns and productivity might not be possible.

The market is also reconciled to the disinvestments of loss making PSUs only as promised in the Congress manifesto and advocated by the Left parties. Mr Teckchandani mentioned that FIIs had remained bullish about China's communist regime's reform process.

Mr Nilotpal Basu, CPM's leader in Rajya Sabha, told Business Line that a section of the stock market had been moving with a predetermined notion against the Left in the last few days. "The alarmist voices within the market circles reflected the manipulative and over-speculative elements." The high volatility witnessed recently harmed the retail and long-term investors, he added.

"If the Left comes to a position to influence the Government policy vis-à-vis then it will facilitate greater transparency and integrity in the domestic capital market," Mr Basu said.

Mr Basu, who was on the JPC probing the 2001 stock market scam, added that, "We would like to make the market safe for the long-term investors, professionals and retail participants. We are not against the reforms but would insist on a holistic social security regime."

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