Singh’s ‘Game Changer’ Win to Unlock India Economy; Shares Soar

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Make room for another billion consumers increasing their resource consumption:

India Stocks, Rupee, Bonds Surge on Congress Win; Shares Halted

by Pooja Thakur

May 18 (Bloomberg) — India’s benchmark stock index jumped
a record 17 percent, bonds rose and the rupee gained the most in
two decades after Prime Minister Manmohan Singh’s Congress Party
won nationwide elections.

Share trading was halted for the first time ever after the
Sensitive Index, or Sensex, breached a daily limit set by the
market regulator. The rupee climbed 3.1 percent against the
dollar and the benchmark bond yield fell 16 basis points, the
biggest decline in a month.

“Markets are euphoric,” said Rahul Chadha, the Hong Kong-
based head of Indian equities at Mirae Asset Global Investment,
with $46 billion in global equities. “The focus by federal and
state governments on development will lead to a structural re-
rating of India.”

The ruling Congress party won the most seats since 1991,
when then-finance minister Singh abandoned Soviet-style state
planning and introduced free-market reforms that have helped
India’s economy quadruple in size. With almost twice as many
seats as the main opposition, Singh, 76, may further reduce
barriers to foreign investment in insurers and retailers, plans
that had been frustrated by communist lawmakers.

Bharat Heavy Electricals Ltd., whose turbines and
generators light up three of every four homes in India, leaped
33 percent. The Congress victory will clear the way for the
government to proceed with billions of dollars in pending orders
and should also give foreign investors confidence in the country,
Bharat Chairman K. Ravi Kumar said in a telephone interview.

Kamal Nath, trade minister in the outgoing administration,
said in an interview the government “should aim” to boost
growth to 8 percent in the business year that started April 1.
The $1.2 trillion economy is expected by the central bank to
expand 6 percent, compared with average growth of 8.6 percent in
the previous five years.


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