Boston, MA 05/21/2014 (wallstreetpr) – After soaring to record levels, HDFC Bank Limited (ADR) (NYSE:HDB) took a pause from breaching new highs. During the last week, Indian ADRs participated in a massive rally ahead of the election results, but soared to higher levels fueled by the clear win of Narendra Modi led BJP. Narendra Modi is scheduled to be sworn in as PM on May 26, 2014 amid high expectations that his party will bring about long awaited major reforms to pump in life into the slow-paced economy growth.
High Expectations
However, some analysts urge to maintain caution as they feel that the new government may fail to meet the high level of expectations set by the people of India. Even traders and investors have paid heed to those doubts as the market capped the rally on Tuesday and profit booking was seen to some extent. In the last few days, Indian stocks have pulled in a lot of attention from around the world. Among the four economies, Brazil, Russia, India and China, India ranks first in terms of its performance so far this year, recording a growth of 15%.
Wait And Watch
Experts see Modi’s clear win as a mandate from the voters of India, which will now make it a lot easier for Modi to act on the promised reform policies. But, looking at the history, the experts are wary as many of the economic “reformers” have failed to deliver the so-called reforms. Therefore, serious watchers suggest investors to wait and watch with caution before going with the flow.
During an interview with CNBC, an International market analyst, John Krey of S&P Capital IQ said that the sustainability of the Indian market rally depends on whether Modi fulfills his promises of economic reform. He added that the new government should be quick to spell out the roadmap for the economic, political and regulatory reform program, before they run out of the time and face the same fate like the earlier government regimes did.
