Stock markets reached new highs as foreign institutional investors (FIIs) made huge investments in equities boosting sentiment on bourses. While some say it is because of the expectations of a strong government at the Centre after the elections, others argue that India continues to be the favourite destination of foreign funds irrespective of whoever comes to power at the Centre.

The S&P BSE Sensex closed above the 22000-mark at 22055.21.

The rupee strengthened to 60.48/49 on Tuesday from 60.77/78 a dollar.

While FIIs invested $2,888.40 million (net) in equities till date in calendar 2014, it made a net investment of $2534.82 million in equities till date in March alone.

“Optimism surrounding the stable government prospects post-election has led to FIIs pour in capital, boosting the equity markets to record high,” Upasna Bhardwaj, Economist, ING Vysya Bank.

“We have been positive on the Indian market given steady earnings growth, reasonable multiples and a stable Indian rupee ,” said Neelkanth Mishra, Head of Equity Strategy, India, at Credit Suisse.

The upcoming elections offering the possibility of a democratic ‘refresh’ - rare among emerging markets - have added to India’s relative attractiveness on macro parameters.

“We expect capital inflows to continue, driving mild currency strength.”

India’s prospects are in stark contrast to the political and socio-economic troubles in several emerging markets. Said Mr. Mishra, “Perhaps uniquely among emerging markets, there is likely to be a non-violent regime change, one — if opinion polls are to be believed — that should bring on board a strong government.”

Mr. Mishra, however, said that he disagreed with the consensus view that elections could revive the investment cycle. “Only a fourth of projects are stuck with the Central Government”.

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