Odds favour Bharatiya Janata Party (BJP) in the coming Assembly elections in Gujarat, although the party may not retain the same majority that it had won in 2012, writes CLSA managing director Christopher Wood in his weekly commentary. He finds fault with the campaign strategy of the Congress vice-president Rahul Gandhi who is raising national issues such as Goods and Services Tax and demonetisation instead of attacking the Gujarat government.
Prime Minister Narendra Modi has bigger stake in his home state as results will make or mar his future at the centre.

“If Modi remains well positioned, the rest of his first term in office is likely to be focused on generating jobs ahead of April-May 2019 general elections. There are three areas where Modi hopes to generate job growth in the next 18 months. The first and the most important is the ramp up of affordable housing for all by 2022 policy,” Wood says adding that the PM cannot afford to slip his home state from under BJPS’s control.

The CLSA MD and chief equity strategist wrote that it was correct to assume that teething problems arising from the implementation of GST will be sorted out within 6-12 months. Investors need to ignore the short-term noise and focus on the long-term positives of the GST. He also advised investors to firm up profits in the current high valuation stock market.

Dalal Street analysts say investors and brokers are factoring in BJP’s win in both Himachal Pradesh and Gujarat. The market was looking ahead to international rating agency Standard and Poor’s latest comment on India’s sovereign rating within a fortnight of Moody’s decision to upgrade India by one notch to Baa2 with stable rank. Analysts say even if S&P desists from taking a tricky call, its observations on the domestic economy in the aftermath of demonetisation and GST would throw light on the government’s achievements as well as drawbacks.

Money and share markets are also awaiting release of GDP data for quarter ended 30 September which is due on 30 November.

The last trade of the week on Dalal Street on Friday was marked by sustained upside movement in stock prices without a blemish of profit booking as was seen in previous two sessions. The 30-share Sensitive Index of Bombay Stock Exchange and 50-scrip Nifty of National Stock Exchange opened with positive margins and kept the momentum going on buying in heavyweights and bank shares. The Sensex closed 33,679.24 (+91.16) points, up 0.27 per cent. Nifty at 10,389.70 (+40.95) points increased 0.40 per cent. Nifty Bank settled for the week at 25,779.65 (+43.40) points gaining 0.17 per cent.

In Sensex, 19 shares ended up and 12 down. For Nifty it was 35:15. Gainers in BSE benchmark included Infy `1,009, 1.78 per cent, Kotak M Bank `1,031.10, 0.99 per cent, M&M `1,433, 0.93 per cent and ITC `260, 0.72 per cent.