Monday, May 18, 2009

The Communists Are Out, India's Market Soars

MUMBAI, India (AP)India's stock market surged an unprecedented 17%, forcing trade to close for the day, after the Congress Party's definitive victory in national elections set the scene for long-delayed economic reforms. Within seconds of trading, the Bombay Stock Exchange's benchmark Sensex vaulted 2,110.79 points, or 17.3%, to 14,284.21, triggering the historic shutdown Monday (see chart above). Infrastructure, banking and real estate companies led gains.

Putting to rest fears of an unwieldy coalition, the victory raised hopes of a revival in foreign direct investment and economic growth, as well as tax reform and significant infrastructure spending. The near collapse of India's once powerful communist parties — which lost more than half their parliamentary seats — paves the way for long-awaited economic reforms, many of which the Left had blocked over the last five years.

The Congress party now has more room to ease restrictions on foreign investment in insurance, retailing and banking. The government may also sell some of its stakes in state-run oil, banking, and fertilizer companies. The nation's pension regulator could get proper legal standing, which would encourage greater investment. And some steps might be taken to loosen hidebound labor laws, like allowing contract labor, analysts and business groups say.

Citigroup economist Rohini Malkani said the result would likely revive India's investment growth, which was a key driver of the nation's four-year boom that's now waning in the face of the global slump.

MP: The BSE reached an 8-month high, the highest level since Sept. 11, 2008, and is up by almost 50% from the early March bottom.

7 Comments:

At 5/18/2009 8:37 AM, Anonymous Anonymous said...

This is nothing compared to the pop we will see when Obama is booted in 2012. Get ready.

 
At 5/18/2009 8:59 AM, Anonymous LoneSnark said...

Booted and replaced with what? Bob Barr?

While I agree Bush was preverable to Obama, Bush too gave into demands to sacrifice the rule of law on the altar of pollitical expedience.

 
At 5/18/2009 10:03 AM, Blogger vakeraj said...

As an Indian-American, I am very happy to see this. However, the Congress Party themselves have plenty of problems, and are not nearly as free-market oriented as their rivals, the BJP.

 
At 5/18/2009 10:46 AM, Blogger Paul said...

And in the US, the communist is in and the US market plummeted.

 
At 5/18/2009 11:26 AM, Blogger misterjosh said...

So Paul, you don't think the incompetent leadership we had in office for the last 12 years had anything to do with the market plummeting?

I'm talking congress AND the white house here. I don't know what the republican majority was from about 1998 through their ousting in 2004? 2006? but it certainly wasn't fiscally conservative.

And then Bush last fall - prop up incompetent businesses? "That there don't sound like a good idear, but Hank here says we gots ta, so sure!"

 
At 5/18/2009 1:59 PM, Blogger Paul said...

Heh, looks like misterjosh was riled up my comment. good.

I think part of the deterioration of the economy and the stock market plummeting in October-ish was due to the realization that we were about to elect a radical community organizer from Cook County to the highest office in the land. Can't prove it, but I certainly think it's reasonable, especially given his planned avalanche of spending, taxes, and debt.

 
At 5/18/2009 3:15 PM, Blogger 1 said...

"So Paul, you don't think the incompetent leadership we had in office for the last 12 years had anything to do with the market plummeting?"...

Hmmm, what are these alledged incompetencies of the last 12 year you are talking about misterjosh?

I have my own ideas, I was curious what your's were...

"I don't know what the republican majority was from about 1998 through their ousting in 2004? 2006? but it certainly wasn't fiscally conservative"...

No argument there...

Then again much of what we are seeing today was started before either George W or slick willie were born...

Obviously both administrations and their respective Congresses threw more gasoline on that fire called 'entitlements'...

From USAToday, dated May of '08: Taxpayers' bill leaps by trillionsThe federal government's long-term financial obligations grew by $2.5 trillion last year, a reflection of the mushrooming cost of Medicare and Social Security benefits as more baby boomers reach retirement.
That's double the red ink of a year earlier.

Taxpayers are on the hook for a record $57.3 trillion in federal liabilities to cover the lifetime benefits of everyone eligible for Medicare, Social Security and other government programs, a USA TODAY analysis found. That's nearly $500,000 per household.

 

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