India election: Policy over politics

Key takeaways

• The victory of the state elections by the ruling party BJP have greatly mitigated the risk of populist rhetoric from the ruling party ahead of the national elections in the first half of 2024
• The recent state election outcomes and what they portend for the national polls in terms of continuity in the government serves as a shot in the arm for both equity and bond investors
• The push for reform is irresistible, driven by a belief that the country must have a strong economy to improve the standard of living
• In terms of policy expectations, equity investors continue to look for policies that support investments in manufacturing, and stability in the tax regime, while bond investors would like to see a continuation of fiscal discipline, and policies that support stable inflation
• In hindsight, any temporary post-election pullbacks have always been good opportunities for investors to get on India bandwagon