Uk elections 2017 end in hung parliament, but indian markets will weather the storm

UK Elections 2017 end in hung parliament, but Indian markets will weather the storm

MARKET NEWS - Indian markets edged lower on Friday, in line with their Asian peers as the polls in the United Kingdom (UK) hinted a loss for the British Prime Minister Theresa May's ruling Conservative party that could result in a hung Parliament and delay Brexit talks.

Asian markets were trading mixed on Friday, with Nikkei, Straits Times and KOSPI marginally in the green, while Hang Seng, Taiwan Weighted and Jakarta Composite slipped 0.1% 0.3% in intra-day deals. Back home, the S&P BSE Sensex and the Nifty50 indices were trading around 0.2% lower each at 31,153 and 9,618 levels, respectively.

Going ahead, the reaction by financial markets will be seen as an important gauge of how investors look at the United Kingdom’s prospects, the impact on Indian markets, however, is likely to be limited.

Though the fall seen on Friday was warranted given the global linkages, analysts say, Indian markets are expected to perform better than most other emerging and developed markets over the long run. On the contrary, the UK poll outcome that could delay Brexit talks could work in favour of global financial markets, including India.

“Brexit is a fact and the new government will have to negotiate accordingly. However, I expect these negotiations to be weaker in case May loses the election. The markets were never in favour of Brexit and to that extent, incrementally weaker Brexit negotiations and a possible delay will be appreciated by the markets. The Indian markets will weather this storm as there is not much at stake as far as India is concerned. As best, trade negotiations with the UK will have to be reworked,” explains U R Bhat, managing director, Dalton Capital Advisors.

The Indian economy with a stable macro environment and government pushing through reforms, favourable monsoon forecasts and with a banking sector undergoing an overhaul, Indian markets have enough buffers to withstand the poll outcome in the short-term, analysts say. They expect the impact to be transitory in nature with the markets likely to recover soon from any knee-jerk reaction.

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ARTICLE SOURCE – BUSINESS STANDARD