Elections in India are unique. Colourful, chaotic, often violent, the political process there has a direct impact on more lives than any other. By the time this week's copy of the Investors Chronicle hits the shelves, the result will be known. And who wins matters, not just for half-a-billion voters taking part, but for financial markets, too.
Indian elections and stock market volatility have, in recent times, been inseparable bedfellows - equities slumped by 19 per cent post-2004 and rallied 18 per cent in 2009. In the past week, and after a series of record highs, the local Sensex index jumped 8 per cent and above 24,000 for the first time. Exit polls showing the opposition, Bharatiya Janata Party (BJP), winning a majority take the credit. Led by controversial Hindu right-winger Narendra Modi, the BJP has campaigned on a platform of economic reform and is heavily backed by Indian business leaders.
"Investors hope a Modi government will decisively break the log-jam that has plagued India's long-running reforms process, and push through policies needed to stimulate the economy," explains Deepak Lalwani, founder of London-based consultancy, Lalcap. "Infrastructure, manufacturing and banking shares, perceived as winners from a Modi win, led the rally."
Avinash Vazirani, manager of the Jupiter India Fund, is excited, too. "We could be seeing the start of a bull run in Indian stocks that has the potential to last three or four years," he says. "There is a wall of local money that is waiting to find a home."
But is this sustainable? GDP growth has halved in the past three years to below 5 per cent, and interest rates may have to rise further from the current 8 per cent to slow inflation. And International Monetary Fund (IMF) forecasts for growth of 5.4 per cent in 2015 and 6.4 per cent the year after hinge on successfully stimulating investment and growing exports.
India's growth story "remains as attractive as ever", argues Pankaj Murarka, a fund manager at Axis Asset Management. And, while bureaucracy remains a huge problem, simplify the tax system, improve regulatory processes and quicken the approvals system, and those IMF growth targets look achievable.