Reference Auto

The stock markets are at a new high, and this time, it seems that the rally could be sustainable. The Sensex has gone above the 19,400-points mark and foreign direct investment or FDI push in Parliament (both in the Lok and Rajya Sabha) would probably ring in the second phase of India’s reforms.

Though the Bahujan Samaj Party of Mayawati and Samajwadi Party of Mulayam showed their reluctance, there was a tacit understanding with the Congress to pass the reforms Bill (FDI Bill in retail, that is) in the two Houses of Parliament.

Remember the 1990s, when economic reforms got its first push. As a result today, all kinds of foreign brands are at our doorstep. Be it Coke or Pepsi, Kentucky Fried Chicken or even Adidas, Puma or Nike for that matter. As a result of reforms, today we have numerous malls across the country, which is a shopper’s (as well as a window shopper’s) paradise.

This is what the first phase of reforms has done to us. Now, what can we expect from the second phase?

We will have a wider choice of apparel brands and we can expect every food company in the world to be in India (like Starbucks Coffee, among others) and see the entry of a litany of latest electronic gadgets, and get them all for a bargain.

We will see global giants like Wal-mart, and with their entry, companies like Reliance Retail, Pantaloons, Big Bazaar and Westside may have to make way for their bigger cousins or have to tie up with them in order to stay afloat.

Small or kirana stores would bear the brunt of this, but with FDI in retail, the supply chain infrastructure in the country would see a sea change and get a tech boost.

Coming back to the stock markets, we could see the Sensex touching the 20,000 points-mark this year itself and this could be ushering in glad tidings for the next year.

And for those who invested in mutual funds in February (when the Sensex was around 17,000 points), could wait for may be a year, till December 2013, when there is possibility that the Sensex would scale the 22.000-23,000 points-mark.

If this happens, the gain could be over 50 per cent. After FDI in retail was okayed by Parliament, one thing was almost certain: The move would give a permanent succour to the stock markets.

But if myriad political parties hog the limelight, it could spell disaster for the bourses.

If the 2014 election sees an indecisive India (with factional parties ruling the roost), the stock markets could witness permanent damage (at least for the next four years).

But if there is political stability, the stock market will surely head northwards and investors can start picking up some lucrative stocks from now.