Dalal St makes a U-turn on poll news

Says Nimesh Kampani, chairman of JM Morgan Stanley: ‘‘I’m very positive and bullish. It will be even better for the markets if the number of seats and number of people in the government are high. This will bring in stability.’’ The Sensex slowly recovered the lost ground and even registered a gain of over 100 points. It surrendered some of this gain later but managed to close with a gain of 41 points at 5399.47. The S&P CNX Nifty gained 6.40 points or 0.37% to settle at 1,717.50.

However, PSU and banking shares took a severe beating. PSU shares came in for heavy hammering as investors were concerned over the disinvestment programme. Indicating the sharp ups and downs of the market, the Sensex showed a huge swing of 450 points during the day.

Top fund managers were optimistic about a stable government at the Centre. Fortunately for the market there’s no hung Parliament and uncertainty over poll outcome has disappeared. ‘‘There are only two or three issues such as privatisation of a good company, foreign partner coming in as strategic partner and labour reforms. But, I don’t think these issues will cause much concern as the government can think of retaining 51 per cent control in case of privatisation and labour reforms can progress slowly. With a good finance minister like Manmohan Singh, there will be no problem,’’ Kampani said.

Is the worst over for the stock markets? Sensex had lost 620 points, or 10 per cent, after April 23 on election uncertainties. On Tuesday itself, the Sensex lost 230 points following the exit of TDP in AP. ‘‘I think the market movement today reflects the mood and sentiment of market players at large,” says Shitin Desai, vice-chairman of DSP Merill Lynch. “We are of the opinion that fundamentally there is nothing wrong with the markets and the new Government will carry on the process of economic reforms,’’ he adds.

Fund managers are hoping that the situation will improve in the coming days. The market capitalisation had fallen by a whopping Rs 127,250 crore to Rs 11,33,400 crore in the last three weeks.

‘‘As for the market mood going ahead from here, things should be back on track… even if there are initial hiccups after the formation of the new government. Over the medium to long-term, the reform process is expected to be top of the agenda of the new government. So market players have nothing to worry,’’ said A.K. Sridhar, chief investment officer (CIO), UTI Mutual Fund said.

Marketmen are eagerly waiting for the next move by the Congress-led alliance. People heading economic ministries like Finance, Industry and Commerce will be the key drivers of the market in the coming days.