Lok Sabha Elections 2019

Corporate India,
stock market veterans vote in
Mumbai

Stock market veterans come out to vote in

Mumbai on Monday as the voting in the
fourth phase of the 2019 Lok Sabha elections
are held in 17 seats in Maharashtra. The
Indian stock markets were closed today on
account of the general elections.
Anand Mahindra, chairman and managing
director, Mahindra and Mahindra: “You have
to vote with gratitude because what we have
today is a privilege and I am very lucky that I
was born post-independence in a free country
and I have now reached my 60s in a free
country. I think that is a thing that I have to
be grateful for. So my appeal would be, come
because it is a right, but also it is an obligation
and it is a privilege.”

“The key issue is integrity, the key issue is the

economy and jobs. If we can run a clean
government that delivers jobs to everybody,
then I think this country is going to get
moving,” he added.
Ramesh Damani, Member, BSE: "Voting
really matters as our founding father
Mahatma Gandhi said that we should be the
change that we wish to see. Therefore, there
is no better way to change our government to
have a peaceful transition of power than to
come out and record votes,” he added.

“We have had a lot of volatility around the

elections but generally India continues at 7
percent growth which is very good by
international standards; not good by our own
expectations perhaps. So we will continue to
grow well and most governments will now
lean towards free market operations,
inclusive society and there is a reason to be
optimistic that the 17th Lok Sabha will deliver
stellar returns over the previous Lok Sabha,”
Damani further added.
Bharat Iyer of JP Morgan: “The last opinion
polls before polling started, seemed to
suggest that the NDA coalition would get
about 270-280 seats. The UPA was perhaps
being tipped to get about 150 seats with
other regional parties getting the balance.
That is where the market is set at this point in
time. I guess anything meaningfully short of
what the market is pricing in right now, would
constitute a negative surprise, particularly if
the verdict is less than 250 seats.”

On markets, Iyer believes that markets will

eventually revert to fundamentals. He said,
“There could be a bit of volatility for 2-3 days
around the results depending on how the
verdict goes.”
“We still remain constructive over the
medium term. The good part is that corporate
earnings seem to be staging a smart recovery.
For the first 9 months of the current fiscal
year, earnings have grown at 13 percent. The
fourth quarter should if anything be better
because you have a very favourable base
effect. We are looking at about 18 percent for
next year as well. So, corporate earnings are
the big story as far as we are concerned,” he
added.

Deepak Parekh, chairman of HDFC: “In South

Mumbai, we look at local issues and in the
center, we want a stable government who
can give stability for the country for the next
5 years. We want someone who will look
after our constituency, improve the
infrastructure in Mumbai because this is our
constituency, so, we want better
infrastructure here, better traffic, better
security, safety everything.”

“Growth will come. There has been a little lull

because of election campaigning. I am quite
confident that the growth will come back,” he
added.

Ridham Desai, head of India equity research

and India equity strategist at Morgan
Stanley: “I think from February 27 to date,
there is some expectation in the market that
India will deliver near majority or maybe even
a majority government. I think that
expectation is getting baked in. I do not think
this is like 2004; in 2004 the expectations
were very different which is why when it did
not come through, the markets fell a lot. It is
certainly not 2009 when the expectations
were so low that when India delivered a
better than expected result, we got a big rise.
I think this is somewhere in the middle of
2004 and 2009."

"Suppose the market does not get a majority

or a near majority government, and it gets a
fractured mandate which basically means that
we get a third front government, then I think
there could be a correction in equity prices
because that is not what is priced in.”

Dipan Mehta, founder and director at Elixir

Equities: “Indian elections, especially Lok
Sabha has always thrown up many surprises.”

“By and large India has had a lot of policy

continuity, but what the market does not like
is populist measures. Depending on who
comes to power and what kind of populist
measures they follow, I think the capital
markets will react accordingly. Hopefully, we
will have more conservative policies, but one
really cannot say, let us just keep our fingers
crossed,” he added.

Shobhana Bhartia, chairperson and editorial

director, HT Media: “Nationalism and
security-related issues have been marketed
very effectively by the BJP. They have made a
concerted strong pitch.”

“A bulk of the Prime Minister’s speeches is

less about what they have done in terms of
delivering on the promises or going forward
on other developmental initiatives. It’s
primarily based around Balakot, nationalism,
security-related issues. So the market has
succeeded. I do not know whether it is as
much of an issue that has resonance
everywhere but because of the strong BJP
marketing pitch, what I pick up from various
people from the field is that people are
talking about it, they do feel that they are
secure. So to that extent, I would say that the
ruling party’s spin on this narrative has
succeeded.”

Atul Suri, CEO-PMS at Marathon Trends:

“When it comes to these elections, I am
voting for the country. I am voting for a Prime
Minister, I am voting for the nation. So I
would look at the macros and for me
connected with the market that I am, I would
look at the economy and how the market
would pan around and what would be good
for the market. Therefore, my look is pretty
macro, large, pretty topdown.”
Adi Godrej, chairman of Godrej Group: He
expects growth to pick up post elections. He
said, “I think generally, by and large growth
will revive on fronts. If growth revives, private
investment will see an upswing.”

Sunil Singhania, Founder, Abbakkus Asset

Management: “We are the largest democracy
in the world, 130 crore population and almost
100 crore people voting. I think it’s not just a
right but also a duty to cast a vote. You have
to choose the right candidate, you have to
choose right government because they are
going to rule you for the next 5 years.”

Talking about infrastructure, he said, “A lot of

projects start in Mumbai but the execution is
pathetic. Thankfully the Metro work, so far
the execution has been much better.
However, having said that there is a 600-
meter bridge here (Goregaon) which took 4
years to complete. I personally met the
commissioner 2-3 times for this. These small
things are irritant. So things have to
progress.”

“Mumbai contributes a large chunk as far as

taxes are concerned, but it’s not just that, it is
basically the barometer of the financial
services; almost all investors who come to
this country land in Mumbai. So it has to be a
city which showcases the nation. Therefore,
both the state and central government, as
well as local authorities, should ensure that
they spend a lot of time, resources and effort
in creating good infrastructure,” he added.
Sridhar Sivaram, investment director of
Enam Holdings: “It doesn’t matter which
party is going to lead it. As long as we get a
strong government in the centre that makes a
big difference. So this is more a vote for
continuity of reforms whichever party
comes."

Talking about the market, Sivaram said, “The

market currently pricing in a continuity of the
National Democratic Party (NDA)
government.” According to him, the market
can be volatile in near-term given election
uncertainty.

Manish Sonthalia of Motilal Oswal AMC:

“Nobody has said that the direction of the
market and the fundamentals have to move
in tandem and that too within the short term.
We are in the middle of the Q4 numbers and
there is no earnings growth to be reported.
Except for the banks, earnings growth is going
to be zero.

"However, markets if they are assuming the

base case scenario as far as election results
are concerned, is looking forward to an NDA
government with a plethora of new set of
reforms, something like labour reforms,
something like land reforms, then markets
would tend to extrapolate some of these
positive benefits which are about to come in a
few years’ time even today.”

Pawan Goenka, managing director at

Mahindra and Mahindra, said: “I do not think
investments is a function of which
government comes in. It is a function of does
the demand take off. Right now for many of
the industries, the last 4-6 months, the
demand has been subdued and that is
probably the reason why some of us have put
on hold our investment plans. Investment will
depend on whether we are able to use the
current capacity and that will depend on
demand equation.”