Indian money managers are optimistic the country's stock market will recover ground once the April general elections are over.
The Bombay Stock Exchange's broad market index fell more than 28% last year. But the managers believe foreign investors will begin flocking back, once uncertainty over who will become the country's next prime minister is resolved.
Prime Minister P.V. Narasimha Rao, whose Congress Party instituted the 1991 economic reforms that opened the country to foreign investors, is in a tight race with a candidate fronted by opposition party Bharatiya Janata Party. A recent scandal tainted some of his key opponents, though three key Rao cabinet officials were named as well.
"We expect 1996 to be a strong year" after the elections, Ajai M. Kaul, country manager of Alliance Capital Asset Management, Bombay, wrote in a mid-February report to investors. In fact, Mr. Kaul expects "early-bird foreign investors" to start accumulating stock in Indian companies ahead of the elections.
"We also expect asset allocation money from foreign investors to be directed to India in 1996 as investors look at emerging markets and at the underperforming markets of 1995," he wrote.