Market set to surge on UPA's thumping victory in election

The Indian stock market is set to surge today following the impressive performance of the United Progressive Alliance (UPA) in the just concluded Lok Sabha elections. The market will now keenly watch as to who gets the key economic ministries viz. finance, commerce & industry etc.

Prime Minister Manmohan Singh's coalition defied predictions of a tight election and was only about 11 seats short of an majority from the 543 seats at stake, according to election commission data. Congress' alliance took 261 seats, sweeping aside its nearest rival, the bloc led by the Hindu-nationalist Bharatiya Janata Party (BJP), which won only 159 combined. Congress, which alone won 205 seats, needs a handful of partners to reach the 272 seats needed to take power, and is expected to seek the support of more smaller parties or independents. Congress leaders will meet on Tuesday to officially endorse Manmohan Singh as prime minister, after which the party will meet its coalition partners to decide potential new allies.

Armed with a popular mandate, the Congress led UPA government is going to stake claim today to run India for another five years. The Congress and its allies will go to meet President Pratibha Patil today to show that they have the numbers. The first meeting of the newly-constituted Congress Parliamentary Party (CPP) is expected to convened in a day or two to elect its leader. Singh, who is already the Prime Ministerial candidate of the Congress, is also likely to be elected by the MPs at a joint meeting of the UPA parties. The Congress must form a government by 2 June 2009.

Financial sector reforms are likely to get a push in the coming days, which were relegated to the back seat due to persistent opposition from the Left parties, with the Congress-led UPA set to form the next government. Left-less victory of the UPA over BJP-led National Democratic Alliance (NDA) would not only signify the formation of a stable government, but also revive hopes of a slew of pro-market policy changes.

Foreign funds are in aggressive buying modeian stocks. As per the provisional figures on NSE, foreign institutional investors (FIIs) bought shares worth Rs 983.86 crore and domestic funds bought shares worth Rs 432.47 crore on Friday, 15 May 2009. FII inflow in May 2009 totaled Rs 9270.40 crore (till 14 May 2009) while their inflow in calendar year 2009 totaled Rs 9627 crore.

Asian stocks fell today as Panasonic Corp. and Mizuho Financial Group Inc. reported losses and oil prices slumped. Treasuries and the yen advanced as declines in equities prompted investors to seek safe-haven assets. Key benchmark indices in China, Hong Kong, Japan, South Korea and Singapore fell by between 0.95% to 2.86%. Taiwan's Taiwan Weighted rose 0.09%.

The US markets closed lower on Friday, 15 May 2009 as energy shares tumbled on worries about weak demand. The Dow Jones Industrial average was down 62.68 points, or 0.75%, to 8,268.64 and the Nasdaq Composite Index slipped 9.07 points, or 0.54%, to 1,680.14. The Standard & Poor's 500 Index was down 10.19 points, or 1.14%, to 882.88.