10th March, 2009

What will drive the Indian Stock  Markets in the year 2009? If your answer is "Global Economy", then you have porbably got it wrong.

Accroding to most stock market analysts the results of Indian general elections this summer will not only decide the next government of the country but also the mood and momentum of stock markets as the outcome of polls would be a more important factor than the economic and corporate score card of Indian companies.

According to an investor survey conducted by global financial services major Morgan Stanley, the results of the general elections would the second most important driver for the Indian stocks in 2009, after the global market trends.

The poll outcome would be more important than corporate fundamentals and the country's fiscal and monetary policies, the survey found.

Experts and brokerage firms also agreed that the general elections, where an estimated Rs 10,000 crore would be spent and is being seen as an unofficial stimulus for the economy, would be a key driver for the stock markets going ahead.

Equity analysts at another global financial services major HSBC also said that the general elections "could be a major catalyst, especially if the winning coalition is business friendly and can step up economic reforms".

According to Geojit Financial Services' Research Head Alex Mathew the markets would react positively if the election results throw up a single party majority or a strong coalition forming the government.