India Inc. is surprised at the close finish in the 18th Lok Sabha elections and remains hopeful that the new government will push for reforms. Industry heads have told Mint that the opposition getting substantial votes is also a sign that checks and balances are in place.

Sajjan Jindal, chairman of JSW Group, in a statement on today’s election results, said, “Very difficult to gauge the mood of public in a vast country like ours. This is amply clear from today’s numbers! What we are witnessing today is something nobody expected and showcases how a democracy of our size functions.”
“The biggest question on the mind of investors is whether the pace and quality of reform will continue as it has over the past 10 years without the single majority. The economic reform agenda articulated prior to the results are essential to India becoming a developed nation by 2047. These will need to be bolder and more far reaching than the past for this ambitious target to be met,” Siddarth Pai, co-founder, 3one4 Capital.
“From a fund manager’s perspective, our job is to use every opportunity in a very sensible way. In my mind, if BJP had come back with a strident “400+”win, it would have had the potential to create an irrational exuberance in pricing. Now, we have continuity with sanity, ” said Gopal Srinivasan, founder, TVS Capital.

The bourses reacted sharply to the changes in voter’s sentiments. After a 3% surge on Monday, Indian equities witnessed a bloodbath on Tuesday, with headline indices falling more than 7% each intra-day. Nifty 50 and Sensex hit the lowest since 23 March 2020 and 4 May 2020, respectively. A negative surprise in India’s general elections outcome spooked investors, with the ruling National Democratic Alliance (NDA) set to return albeit with a less-than-expected majority. That said, the broad direction of the economy is unlikely to change.

Brokerage firm heads expect markets to turn volatile for a short period before regaining their equilibrium. “The latest numbers suggest that the NDA government could return to power with a lesser than last time seats,” said Ajay Menon, managing director and chief executive officer (CEO), Broking & Distribution for brokerage firm-Motilal Oswal Financial Services. “We expect the volatility around the outcome to reduce over the next few days and market focus to return on macro and fundamentals which continue to remain strong,” he added.

Corporates hope that policies on the ground do not change. “Setting up fabrication units, component manufacturing and assembly units in the country is crucial for the domestic ecosystem to continue on its upward trajectory, and it is unlikely that this process will be disrupted at any point,” said Ajai Chowdhry, co-founder of HCL Technologies and chairman of mission governing board, National Quantum Mission.

The startup community is hopeful that the new government will bring in stability and continue with business reforms. “The hope from the startup community is that the newly formed government will be stable and will continue with its pro-business policies to ensure India continues to grow at 8% p.a.,” said Ashwin Damera, co-founder Eruditus—an edtech firm that became a unicorn in 2021.

Law firms are betting on a smoother regulatory environment to propel business growth. “India’s strong demographic advantage, thriving entrepreneurial spirit, and growing financial literacy are set to ensure that its economy continues on an upward trajectory over the next decade…We largely expect the regulatory environment to continue to become more investor- and business-friendly with time. For corporate India, opportunities to grow along with the country’s economy are likely to continue as well,” said Haigreve Khaitan, senior partner at law firm Khaitan & Co.