The stock markets which gained over 17 per cent in the month of April in spite of election uncertainties are raring to go — whether the fundamentals justify or not. With the election results set to come out within a fortnight, fund managers and analysts are hoping that stability and good governance will bring back business confidence and put the economy on a higher growth trajectory.

The new government will take shape at a time when many segments are facing slowdown. “In case the market considers the government to be stable, there should not be any problem. However, if the same is not the case, markets will be very worried. It doesn’t matter who forms the government as long as it is perceived to be stable. A government formed by the third front, may not be perceived to be stable and hence markets may react negatively in such an eventuality,” says Reliance Money managing director Sudip Bandyopadhyay.

Bandyopadhyay feels that the markets will react positively to creation of a stable government and if the UPA again comes to power then the behaviour of the markets will depend on “the other constituents of the new government”.

Kishor P Ostwal, chairman and managing director of BSE-listed research organisation, CNI Research Ltd, has similar views on market sentiments post the formation of a new government.

In volatile times when every investor is moving towards safe havens to park their monies, businessmen and research analysts display the same sentiment towards the government as security and “tried and tested” become the key catch phrases. “A government led by the Congress or the BJP would be a known entity and would take the developmental agenda forward. In such a scenario the markets are expected to move sharply upwards and we could see a retesting of the earlier highs of Sensex touching 21,000,” says Ostwal.