The elections handing over a stable and strong government for second consecutive time is welcome relief to market participants. In particular, it will help keep India’s country risk premium stable amongst its peers. With this out of the way, local policy can afford to start focusing emphatically on the evolving macro narrative.
We had observed in February as to how global policy seemed to be shifting, responding to the synchronized slowdown narrative on global growth. With the European Central Bank (ECB) and US Federal Reserve (Fed) policy meetings since then, these initial ‘put’ options have now been significantly strengthened.