D-St eyes strong pre-LS poll rally

Mumbai: In the run up to the Lok Sabha elections in 2014, Dalal Street is expecting a strong rally. The reason for such hope is partly because the smart gains market players had enjoyed in the run up to each of last three Lok Sabha polls, in 1999, 2004 and 2009. Although economic and market fundamentals do not justify any rally in the sensex from the current levels, marketmen are pinning their hopes on a 'reform-oriented stable government' post the 2014 elections and that could take the sensex higher between now and April-May, when the polls are expected to kick off. 

    Consider this: In 2009, between mid-March, that is just before the polls started, and mid-May when the UPA-II government was formed, the sensex rallied 55%, from about 9,000 level to nearly 14,000. In 2004, the index had rallied nearly 22% during the five months leading up to the polls in April. And in 1999, in the six-month period to the formation of the NDA government, sensex gained 34%. 
    There were phases of negative or muted gains around the 2004 polls, but those were mainly because of negative perceptions about the Left parties, who joined the UPA coalition and players perceived them to have an anti-reform stand. During the last Lok Sabha polls, the sensex rallied on expectations of a stable government and spendings on social welfare schemes by the UPA. 
    Post the elections, after the Congress-led coalition (minus the Left parties) got a mandate better than what was expected, the markets rallied further. 
    The D-Street is now said to be gearing up for a repeat show of the last three polls. 
    "This is a rally of hope that going forward we will have a reform-oriented stable government… and all fundamentals would be ignored in such a rally," said Ambareesh Baliga, managing partner, Edelweiss Global Wealth.