India: Elections race is on - TDS

Mitul Kotecha, senior emerging markets strategist at TD Securities, points out that India’s 900 million voter, 6-week, 7 stage Lower House election, begins tomorrow and PM Modi seeking a second term, looks in good stead going into the elections.

Key Quotes

“Modi’s support has improved in the wake of air strikes against terrorist targets in Pakistan.”

“Polls suggest that Modi and his BJP party could gain a sizeable share of votes, and win a simple majority again, without the need for a broader coalition. Hot spots include Uttar Pradesh and other Northern provinces. BJP won convincingly in 2014 in these states, but will struggle to repeat this.”

“The opposition Congress Party is trying to woo voters, with a minimum income support plan, while the BJP in its manifesto, pledges among other things to launch a pension scheme for farmers. There is a risk that jobs weakness and declining rural incomes could hurt the BJP.”

“USDINR is likely to trade cautiously between 68.50-69.50 over the days ahead, with the rise in oil proving unhelpful. We expect INR to rally, gaining traction as (if) it becomes evident that Modi is on track for a solid win.”