Bloomberg Markets: Asia 06/04/2024

It is almost 8:30 a.m.here in New delhi. Welcome to Bloomberg Markets asia.I am Haslinda Amin and india is counting votes with investors already sharing athird time victory for prime minister narendra modi.Based on exit polls, stocks are at record highs as we await today's open.Of course, this has been the longest and biggest election in history.We've had seven phases over 44 days. And finally, vote counting has begun.It's begun as we speak. And so far, we have Modi and hisalliance garnering about 93 seats. And that's based on those postal counts.At stake, 543 seats, simple majority.

Would do, and that's to 72 if it'saccording to the exit polls. Modi and his alliance set to garnerabout 350 seats. Again, we have Modi wanting a supermajority. By that we mean 400 seats.He wants a super majority so that he can push through what is seen ascontroversial reforms the likes of land as well as labor reforms.Now, this is an economy that's been growing at about 8%, the fastest growingeconomy among G20 nations. We'll be bringing you the results fromthe count. For now, though, let's get you tomarkets in April.

Of course, we're counting down to thatopen to Indian stock market. We've seen record highs for the Nifty inparticular. Euphoria in the market.The question is really whether or not that is sustainable going forward.I think to answer that question, I just think all stock futures on the Niftyhave said in the past couple of minutes, erasing gains of about half a percentfrom earlier. And it seems like as these electiontrends emerge, investors are taking profit.Still, it was, all things considered, a really good day for India stock markets.We saw them, you know, eking out of.

Those record highs on both the Sensexand the Nifty. So we're going to be keeping a reallyclose watch. And now take a closer look at thesectors that we will be monitoring later on.But just to walk you through what we're seeing in the broader Asia-Pacific, itwas a really lackluster session in the US among equities after weak US factoryactivity data raising those concerns about recession, the US Treasuriesreally outperformed and we saw that rise across the curve.So today we are seeing that reflected in the performance in the Asia Pacific,where stocks are pretty much struggling.

For direction.We're seeing bonds climbing as well, even among the stock market in Japanthat decline today. And we're keeping an extra close watchon it as we see those auto stocks on the back foot after Toyota's offices wereraided. That's amid a safety scandal.So let's flip the board as well. Take a look specifically at what we'rewatching in India. It was that record high, as I say, onthe Sensex, on the Nifty, and I think by some estimates, about $150 billion ofmarket cap was added to India. These are the sectors that it reallywell, it was the infrastructure stocks.

I think it was the best day for them inabout four years on the banks, best day in about two years.So these are the kind of industries that we'll be watching very closely whenthose markets open later this hour has. That's right.The Adani Ambani related stocks has given a boost.Hong Thank you so much for that update. So India will announce election resultsTuesday, with investors already cheering a third term for Prime Minister Narendramodi based on exit polls pushing stocks to a record high, as we heard from Aprilearlier. Let's get insight from Suhasini Haidar,diplomatic editor at The Hindu.

Also joining us in this conversation isBloomberg Government reporter Sudi Runyan.And thank you both for joining us especially.Thank you for being with us today. What are you expecting and will the realcount reflect what we saw for the exit polls?Well, it's ugly. It's just a couple of hours away becauseonce the electronic voting machine counting begins, you know, you have morethan I think of 15 million people sort of involved in the whole process, 64.2million votes to be a 642 million votes to be counted.It happens pretty quickly.

So by noon or by lunchtime, we do hopeto have a real result as opposed to the exit polls.I think the exit polls threw up quite a few surprises until the last poll ofelections. No one was expecting the BJP and theNDA, the ruling NDA to cross 300. But it seems from the exit polls thateven 400 is not out of reach. So if the exit polls match up with theresults that come out, it's certainly a startling win because it's one thing tosay you expect the ruling party to be reelected, which I think most peoplewould say it's a question of the numbers, because they've certainly had avery tough campaign.

We certainly seen Prime Minister Modireact in ways we have not seen him do so before.Very tough rhetoric, very harsh rhetoric, often a rhetoric that reallytook on some of the country's minorities and other groups.So there was there was a sense that this was a particularly tough campaign.But if the results are, as the exit polls say, it seems to denote that it'sbeen a very successful campaign, you got to wonder what's worked in Modi's favorin BJP fever. Is it because of his track record growthat 8% and he's lifted 200 and 250 million people out of poverty, accordingto some reports?.

Well, you know, interestingly, each ofthe elections have had a different kind of theme.In 2014, when he came to power, it was an anti-corruption theme.He was getting out the old regime in 2019.It was very much on the back of a skirmish with Pakistan and the idea ofnational security being at the top of the agenda.This election was expected to have an emotional note.It was expected to be about the temple that Mr.Modi inaugurated in January. It was supposed to be about Hinduconsolidation in many ways.

In fact, the surprise has been that morepeople out in the campaigns have been speaking about the economy.They've been speaking about how the 8% growth doesn't necessarily trickle down,that it's essentially a jobless growth that we are seeing in India, the worriesabout not just unemployment but about inflation, those have also been verymuch on top of the agenda. So why Mr.Modi would continue to win? I think the first is a sense ofcontinuity. The second is the full domination of theruling party in every sphere. So today, you know, we see the rulingparty, in fact, has more candidates from.

The opposition who have moved to theruling party than ever before. So if if you were to see a supermajority, as you called it, come through, India would see much more of aone party domination across the entire country.And I think in that sense, there's always the idea that there isn't toomuch of a of a rival, there isn't too much of a single candidate who can takehim on. Let's talk about that city.I mean, a single party domination, not necessarily a good thing for India.I mean, people are talking about how, you know, Modi may push through, youknow, changes in the Constitution, for.

Instance.Well, that's exactly what the opposition has been kind of focusing on.And given India's, you know, composition, its very uniquecomposition, where you have, you know, costs, which is not that in any othercountry. And therefore the affirmative action,you know, the the opposition's campaign we saw clearly focused on, you know,saying that if the BJP and Prime Minister Modi gets the numbers that heis looking for, which is three out of every four seats in the parliament, thenwe really do not know what's going to happen to the Constitution, what's goingto happen to the affirmative action.

So that's a message that the oppositionand its various allied parties have tried to convey repeatedly and over andover and over again to the people. Whether that has stuck to people,whether that is making an impact, are not yet clear.It's of course, the results are going to be out of sorts.And you are saying, you know, the couple of odds, you know, then it's the got toget a much more clearer picture on that. But yes, this is what is one of theapprehensions that while Prime Minister Modi may try to push through some verycontroversial or difficult reforms, that will be put it that way, like landreforms, labour reforms, which India may.

Be needing to push the economy to growbeyond 8%. There are these other social aspectsthat these numbers are likely to give him.And that is where, you know, perhaps the big fight is going to be on the groundand will be clear as the results come out.Right. I should talk to us about theopposition. Right.If Modi and his alliance do get that super majority.What does it say about the opposition? I mean, for the first time in quite awhile, they've actually come together to.

Work together instead of being sodivisive. Well, I mean, it is a question ofsurvival for the opposition, opposition parties and also, therefore, a largerquestion of of of the democracy in India, because no democracy, you know,can survive with a strong without a strong opposition.And, you know, so so the results are going tokind of indicate whether, as was he was talking about, you know, whether Indiais going to go in for a one party, kind of a dominated rule for the next fiveyears, or it is looking for a much more, you know, a much more diverse parliamentand therefore different voices coming up.

And therefore legislations, whateverthey are, whether they are the controversial and the difficult ones orthe easier ones, taking into account the concerns of people of, you know,minority groups on people who are not the, you know, not present in largenumbers. So at one level, it is the biggerquestion of India's democracy and the you know, what what kind of a strongopposition it has. On the other hand, it is also a questionof survival. The the relevance of the opposition inin India. Yes, the opposition has come togetherafter after a bickering we have seen.

Over the last ten years and severalelections not being able to come together.But having said that, the opposition did suffer some very early, you know, blows.We saw one of the major, you know, major partners are allies of the opposition,kind of walk away and join the BJP, strengthening the hands of PrimeMinister Modi in the very critical state.Eastern Indian seem to be Hollywood since about 40 odd lawmakers to theparliament. So there have been these ups and downs,but nonetheless, they've tried to put together a fight.So as we talk about how a modi win, it's.

Almost guaranteed.It's just a matter of how strong that mandate is.What would the next five years mean in terms of policy?If this is a prime minister who wants to achieve 9% growth?Well, to be honest, I work on diplomacy much more.So let me talk a little bit about where we see this going a third term,particularly if in the first term we saw India move very decisively towards, say,Western powers sign many foundational defense agreements with the UnitedStates. I think the second term has seen alittle bit of a balancing with India.

Going back to more traditionalnonaligned positions, particularly after the Russian war in Ukraine.We're seeing it very much right now in the Indo-Pacific as well.There's a little bit of a balancing. Remember, the Modi government has shownthat India can be projected as a sweet spot in the world.It is not China and therefore it does get a certain amount of interest fromthe world. And it is not in the western camp.It is not an alliance partner. So it does get a lot of traction in theglobal South as well. And that's what I think you will seemuch more of this balancing effect that.

The government wants to see India takingin the world. The second part is really going to beand I think this is not something that's a choice.I think it's a necessity for the government right now to try and work outthe situation with China. We've now had four years of themilitaries of both sides, really eyeball to eyeball along a 3500 kilometer light.Prime Minister Modi was asked in an interview, I think, by Newsweek abouthow he hopes to progress with China. And his answer was very simple.He said it's a very important relationship.The situation is of deep concern to me.

And we need results.We need to resolve the situation very quickly.I expect there will be some kind of movement towards that once thegovernment is in the saddle, if it is, in fact, Mr.Modi, as is being predicted. The third place where I do see somemovement is India in repairing relations with the neighbors.They seem to be a little frayed at the moment, particularly the Maldives.We're seeing situations where every country in this region is actually goingto elections like so many countries in the world.So a kind of, you know, calming down.

Post political rhetoric on all sides.And then perhaps India will move in the in the region.There are a lot of trade deals that have been left pending in the lasttenure of this government. And I think those will be a priority.The one with the UK in particular. The UK goes to election as well.The one with Canada has been put on pause because of the problems they'rehaving over allegations that India was involved in an assassination there.And then there is the deal with Australia.A lot of these have to be put into place.The reworking, the ASEAN agreement, the.

Free trade agreement, for example.A lot of these need to be put in place a little faster, I think, because our RCEPis now in place. And finally, I think it will be aboutprojecting India and the world will be watching in terms of its ownrelationship with its democracy as a rule abiding, pluralistic country.On some of the the factors that you mentioned.Judy, just to bring you back into this conversation, we talk about India'srelations with China. Of course, it is complicated.And as much as there is tension, we've seen a lot of Chinese investments inIndia.

How might this play out over the nextfive years before India-China relations? But to go back on the India-Chinarelationship, I kind of agree with what Suhasini was indicating and pointing outtoo, that there is going to be some kind of a rethink because this, you know,this, this kind of a relationship where you have thousands of soldiers, tanks,aircrafts, artillery guns, you know, yourtotal draw on the border, 3000 kilometers, more than 20 kilometer longborder is is kind of untenable. On top of it, we've seen India kind ofdiscouraging investments from China. If India wants to grow at a rate higherthan 8%, then that that money, that.

Investment is going to be, you know,very, very important for Indian industry.At the same point of time, there have been indications the one that was in hewas referring to the prime minister telling Newsweek that it's a veryimportant relationship. So exactly how that is going to happenis not clear. But from the past, what we can safelyassume that this relationship can take a turn for the better or we can seetempers calming down only if there is intervention from the politicalleadership and from the very top. We've seen a you know, and there isprecedence to it.

That is a 2017 India-China conflict.All right, city for the governor. Reporter Steve Richardson, thank you somuch for that. And to our seniors, hide out will bestaying with us for the hour as we wait for more updates from that vote count.Of course, you can also turn to your. But for more on this, go to t go to getcommentary, get analysis as well from Bloomberg's expert editors.Keep it here with us. This is Mark.And. And. Welcome back.And we're live from New Delhi, where.

Vote counting has begun.Of course, it's been a long election and we're expecting results to be to be hadin the next few hours. Of course, we've had.In terms of the the voters. We've had almost a billion eligiblevoters. So it's been quite a big one here.Elsewhere in the market, of course, it is still about the Fed front and centerand of course, treasuries in particular, Treasury bulls losing that conviction.April Hong is on top of that April. Yeah, it's really interesting what wesaw in U.S. Treasuries overnight after that factoryactivity data are coming in.

We're exploring bets that we're going tosee those Fed rate cuts and we're seeing in Japan, Australia, New Zealand, thosebonds also following suit. Keep in mind that despite what we'reseeing in Japan, overall, bond traders have been pretty bearish amidexpectations of what the BOJ's going to do in terms of reducing its bondpurchases and coming through with those rate hikes potentially.We are seeing this climb in Japan, bonds coming also ahead of an auction that isfor the ten year later this hour. Now, let's start the board and take alook at where exactly those U.S. treasuries are sitting, because it was amove across the course to it was five.

Tens that climbed overnight.But we're seeing a bit of a pullback at the moment has.All right. A pullback in terms of treasuries.The latest Bloomberg poll survey indicating that Treasury bulls arelosing that conviction. Let's get more from Mary Nicolo whojoins us from The Lion City. Results show that only a very narrowmajority, 51%, in fact, expects yields to fall in the next few months.Mary, take us through what the thoughts are out there.Yeah, it's quite interesting, actually, to see the results of these pulsesurveys, especially because you saw how.

Just one one month of data, when you seeanything from the ESM coming out or when you see the p e, obviously the marketscales its expectations of what to expect from the Fed.You already had, for example, September, the September US curve is looking foralmost a 70% chance of a Fed rate cut in September versus just a week ago.We were just at just about 50%. So it is interesting that they're seeingthat, you know, their expectations are scaling back for the Fed.But then, of course, any data point that comes through just sways the market inthe direction of keeping hope, hope, hopes of cuts alive.Mary, I want to take you to where I am.

The Indian market.What a run it had yesterday. Lots of questions of whether or not itis sustainable, because a lot of people say, you know, all the good factors havebeen priced in. Yeah.I mean, yesterday we saw was an absolute relief rally because obviously it cameinto under question whether Modi was going to win and how big was hismajority going to be, especially with low voter to low voter turnout.Now that we've seen that the the the likelihood is for Modi to win, it comesto a question of how big is that win going to be?And of course, the key thing here is.

That you want a majority so that you seesome policy continuity. But the fear of a super majority willweigh on sentiment in the sense of that the political agenda might overtake theeconomic agenda. And there's still a long way to go onthe economic agenda front where you have to keep up with pace in terms of growth.And so far it has been performing well, but it's a matter of getting through alot of key reforms, whether it's land reform or Labour policy and of course,maintaining and ensuring that there's an attraction for foreign direct investmentwhich has been lagging for quite some time over the last few years, and tobringing foreigners back not only into.

The equity markets and the bond markets,but also to just establish an investment and a home in India.Right. And for India itself about incomeinequality front and center, as well as creation of jobs, the likes and largestrategies is very. Nicolette, thank you so much for that.Plenty more had. Keep it here with us.This is Bloomberg. Andnow we're showing you the live picture outside the counting center in NewDelhi. That voting count is.And if it's up to those exit polls, Modi.

And his alliance expected to get the 350seats out of the 543 up for grabs. Let's continue a conversation with.Thank you so much for being with us. You talk about how it is important thatIndia has those trade deals. What's significance of those tradedeals? Well, I think the first is one ofcredibility. You know, when the Modi government cameto power, one of the first things they did is cancel all bilateral investmenttreaties because they wanted to build new ones.They were for many years quite against free trade agreements.They said they hadn't helped India at.

All, and especially when India walkedout of the RCP Prime Minister Modi saying, you know, this is not whatMahatma Gandhi would have wanted. However, we've seen a turnaround in thelast few years, and so those trade deals are about credibility.They're also about bringing in investment.All right. We'll leave it there.Plenty more ahead. Keep it here with us.This is Mumbai. While it's D-Day in India, vote countingkicked off just about 30 minutes ago. And so far, what we know is that the BJPand its alliance have got about 93.

Seats, and that's from the postal votes.Of course, we're waiting to hear more. We're expecting to hear the results inthe coming hours. Exit polls again suggesting that Modiand his alliance would get 350 votes. He is after 400 of supermajority, butthat would mean Modi needs the support of the, I guess, states which havetraditionally voted for the opposition. Final list, a closer look at the Indianmarket. We have April Hong on top of that,everyone. Yeah.We are waiting with bated breath. The extent of the majority that the BJPled alliance is going to get.

But all things considered, it looks likewe're going to see a modi 3.0. That already yesterday is something thatmarket seemed to have accounted for. And we saw that surge on those stockgauges. And Nifty, the Sensex both rallying,seeing their best day in about three years to record highs today.We started off on the front foot on stock futures, on the nifty50 risingabout half a percent, but it's erased quite a bit of that actually slippingabout 7/10 of a percent. Now there seems to be a sense of howelection trends emerging, potentially prompting a bit of profit taking.But of course, the sectors we're going.

To be keeping a close watch on as theequity markets open in about 15 minutes from now.The infrastructure related stocks and the ones in the Adani Group, those werethe ones that really outperformed yesterday.But we are also seeing that reaction in the rupee.Remember, flip the board, we saw the second best performing currency in theAsia Pacific yesterday trailing behind the Korean one.And analysts have pointed out that against a backdrop of the elections, Jpmorgan bond index inclusion, that's coming up later this month, as well aslower oil prices.

These are all factors that should leadto rupee appreciation. We're seeing some of the gains fromyesterday actually coming off now at dollar rupee, trailing to what's that8350 handle. There are some concerns as well aboutthe direction of the currency as we have the RBI decision that is due on Friday.And there's a sense that when you look at monetary policy, it is in a prettyrestrictive stage. It is seen to be it seems to be biting alittle more. And that's the sense that the coolinginflation could actually lead to this climb in real rates andcurtail growth.

So this is among the things that we arekeeping an eye on when we look at dollar rupee toss.Oh, that's right. It does seem like the stars are alignedfor India. We have S&P, for instance, expected toupgrade its call on India's sovereign credit rating.Well, let's get more on India's vote counting efforts with our governmentreporter Sudeep Reddy in Sin City. Earlier, we talked about how relationsbetween India and China are pretty crucial.How about other neighbors, the likes of Southeast Asian nations?Where are we with that and where do we.

Go with that?Well, to begin with, there has to be you know, India needs to kind of take heedof the fact that several of the, you know, the neighbors, that that is tosee, you know, countries like Nepal has kindof, you know, vented its anger in a way against India.Similarly, we have seen Maldives. Of course, Sri Lanka is one area whereIndia seems to be way, you know, comfortably poised after its rule duringthe financial crisis in Sri Lanka. But that said, there is Pakistan aswell, which is a close ally of China. And mind you, militarily all, if youlook at it in the the Indian military.

Sort of sees constantly kind of doubleguessing whether they're, you know, the kind of resources it needs to allocatefor either of its borders. So that is one part.So therefore, what one can very clearly see if there is a more detailed and withthe numbers that as the election, as the exit polls have predicted, we can expecta reset over relations with many of these countries.And India could be taking a much more accommodative role.And you know, as against its very, you know, shrill nationalistic role that wehave seen, it kind of projecting itself in the pastexactly how that is going to happen.

Unclear.But also at the same point of time, it will be necessary for India to rebalanceits relationship with its neighbors because it's also trying to projectitself for competing with China forfor for being the leader of the global south.We have seen India kind of trying to project itself in the last G-20, takingthe concerns of the global south nations to G-20, seeking reforms in themultilateral for financial institutions, not only for itself, but on behalf ofthese other countries. So clearly, if there is a, you know, amodi third term, that is something that.

We are going to begin to expect tohappen and happen very quickly. You got to wonder how comfortable theneighboring countries are with Modi wanting to be the leader of the globalSouth. Well, I mean, you know, the GlobalSouth, if you look at it, I don't see positive to see the neighboringcountries having an objection to India playing a large strong a bigger role inthe global South provided their concerns that of Bangladesh, that of Nepal thatare Bhutan, that, you know, are met and met not as substantially butwholesomely. For for, you know, these countriesbecause often we have seen some kind of.

An adversarial relationship.Both statements not so comforting coming out of the Indian foreign ministry.So all those, you know, likely to change if there is a modi to come, thatrebalance, We can definitely expect. Of course, at another level, we can alsoexpect there's some kind of a, you know, discussions of the relationship withChina taking a turn for the better, not being so, you know, inimical, not beingso hostile. How long that is going to take is goingto depend on the numbers that the prime minister gets, the comfort he has in theparliament. If he gets an overwhelming majority, ofcourse, is going to be FOSTER.

But if it is not that, then the Chinarelationship, the improvement in the China relationship may take longerbecause he's likely to face questions then from a much more strongeropposition in the parliament. So let's talk about India's immediateneighbours in the next five years. How much improvement do you think we'llsee in their relationship? Well, you know, it's interesting.When Ms.. Modi came to power in 2014, the firstthing he did was invite all the neighboring countries leaders to hisswearing in. The next time it was a little smallergroup.

It was the state group that he invitedall eyes firstly will be on whom if he does win the election and if there is aswearing in someone whom he will be inviting to that Some have spoken about,maybe for the neighbors, like from the Gulf or from Central Asia coming in.When it comes to South Asia itself, it's a problem for India because even as itpitches to the global, you know, high table in a sense,unless it has neighboring countries on board with India's own growth, itbecomes very difficult. So even small issues with countries likethe Maldives, seeing the kind of growth Chinese companies have had in variousparts of the region become big issues in.

India, I think that will be a real pitchto a smooth ties, at least, you know, with countries like Bangladesh.We're expecting the prime minister here, Bhutan's prime minister, expects to behere fairly soon with Nepal as well. And Sri Lanka, we expect to see inroadsfairly soon. I think after that we will see some ofthe other Southeast Asian neighbours, for example, being reached out to.But immediately what's interesting is within a week there's going to be the G7summit in Italy. The Indian prime minister has beeninvited. If it is Prime Minister Modi, he'salready indicated he's likely to go.

Speaking to Prime Minister Maloney nextmonth, there's an AC summit in Kazakhstan where President Putin,President Xi, the Pakistani prime minister and others from the region willbe there as well. Another very interesting point to watch.So I think the next few months you will see a huge international outreach.Some of it is about consolidating Mr. Modi's position or the Indian primeminister's position in the world. Some of it is going to be about, as Isaid, in looking for new areas of investment into India, because that'sbeen a weak spot for the government. Singapore, of course, is India's biggestFDI source, but even and since 2018, I.

Think.But even so, a 30% drop in last year investment flows coming into India.So I think they want to certainly try to move that very quickly.We're expecting the interior minister in the India Singapore MinisterialRoundtable also to be held in the next few weeks, of course, with policycontinuity expected, perhaps that revival investments will be revised.Of course, we'll get more on analysis as India counts the votes for its recentlyconcluded election. A government report issued by Johnsonwas just with us. Now here's a look at how is looking forthe Indian market as we cut down to the.

Open.Of course, India saw its equities have a fantastic run.In fact, the Nifty surged more than 3% to a record high.We had the rupee also in positive territory.Still ahead. EDELWEISS shares the outlook on India'selections and how the outcome could impact financial markets as well as theeconomy. Keep it here with us.This is the back. And. And we're counting down to the Indianmarket open and April Hong is on top of.

That.April, it does seem like we could see some profit taking after that surge inyesterday straight. Yes, I remember those equity benchmarks.Estimates helped to add about $150 billion to India.A market cap is really that optimism yesterday of policy continuity andclarity that drove the appetite for Indian stocks.And we saw them closing at record highs today.It looks like it's going to be a bit of a pullback.The Sensex, about 2/10 of a percent down.But also keep in mind what we saw from.

Yesterday's performance.We are seeing the rupee also losing some of the gains from yesterday where it wascloser towards the 83 hand or giving up some of that now.Now I wanted to zero in on the stock market performance of some of the AdaniGroup stocks. Let's flip the board if we can, and takea look at what we're seeing there, because it is really the infrastructurespending and the push in that sector that is expected as part of the policyagenda of the Modi government. If he gets this super majority.These are the group of stocks that are expected to really benefit.We have the likes of Citigroup and.

Jeffrey saying manufacturing as well asEV stocks will also do well. Some extent of it might also go throughinto the renewable energy front. Yesterday we saw a lot of the windrelated stocks rising by the daily limit.I remember Modi had previously talked about how they want to make the countrycarbon neutral by 2017. So all of these stocks are in focus.But you know how the Adani Group of companies seem to have, you know, theclosest alignment to the policy agenda of the Modi government.Yesterday, I think there was a swell of about $20 billion in terms of market capof those companies.

The power unit really led those gains.So these are what we watching. We are also seeing very interestinglyyesterday, the so-called Modi stocks, Right, the index of about 50 of themseen as the ones that will benefit the most from that policy continuity.They actually outpaced the gains in the Nifty 50 climbing up 6% versus what wesaw on some of the gauges, the Sensex and Nifty, about 3% gains.So it looks like a bit of that pullback that is underway.And those stocks that really benefited yesterday has.In right now long. For that.And we have a headline here saying that.

India's early official vote count showsa white lead for Modi allies. We'll bring you the details as they comealong. Our next guest, though, is a prominentfigure in India's financial sector and one of the most influential femalevoices on finance. Let's get to our guest, Ritika Gupta,CEO and MD of Edelweiss Mutual Fund, which has around $16 billion in assetsunder management. Radhika.Talk to us about that rally which we saw yesterday, seems to be giving up alittle bit of those gains today. Is it just a matter of profit taking?How much more upside do we have for.

Indian equities?The rally yesterday is not surprising. The capital markets in India haveclearly wanted a political sense of stability and more of a continuity inreforms and with, you know, the incumbent government coming to power.As exit polls show, with a large majority, there's a belief that you willsee policy stability and in fact, maybe more bold reforms that India needs.You know, given the growth that we're seeing.So I think yesterday's rally is exactly what financial markets would havewanted. I wouldn't make too much of today's cutsbecause only numbers have come in.

As far as actual poll results.I think we'll get a clearer picture closer to normal.I do believe that the number for the India government is closer to 400.Markets will be happy. If it's not, you might see some cuts.But if the exit polls, you know, do translate into reality and we get thatsense by noon, I think this picture could change a little bit.But Radhika, you got to wonder how important that margin is.After all, Modi is set to still be in power.Policy continuities set to take place. I mean, isn't there already confidencethat we'll see more of the same?.

Yes.Yes, I think that is I mean, and to some extent, I think I would go as far as tosay, over the last few months, Indian markets have rallied and factored inperhaps policy continuity. The only thing is that, you know, if youhave a large mandate coming in, then some of the reforms that this governmenthas talked about, particularly bold reforms around land, labour, which areexpected because Mr. Modi has talked about India becoming amajor manufacturing hub, you have the ability to take on some of the bolderreforms that have been talked about in the last couple of months and Europe.So I think that that's that's what the.

Market could look forward to.How would you position your portfolio? So, you know, I don't I think India willsee a broad based market rally. I don't buy the thesis that a portfolioshould be positioned for particular sectors.Now, within this, however, historically, I think India's leadership has beendriven by services. I do believe that I would position aportfolio with a tilt towards manufacturing.So that means things like industrials that mean sectors like capital goods.Anything that's a beneficiary of private sector capital expenditure coming intothe market.

I do believe selective schemes where thegovernment is intended to focus defence, for instance, and there's been a largein indigenisation of defence that India has been working on already doing about$3 billion in defence export. So some of those segments, electronicvehicle electric vehicles, because the government has talked about, you know,moving the grid to electric. So some of those themes will besatellite parts of the portfolio, but definitely a focus on the investment andmanufacturing side of the economy. And as we build in the portfolios a moredomestically based portfolio rather than sectors that are very globally linked.What's the biggest risk for Indian.

Investors right now, Radhika?And what assumptions are you making about when the RBI might come into play,when that rate cut might come? So I think, you know, it's tricky tomake assumptions, but I think the rate cut, I think you're going to see aperiod of stable rates, rate inflation, and India is not out of whack.So that is the that is the good news. But I think the RBI is going to be morecautious than one expects. I think the biggest risk is pieces ofovervaluation in some segments. I think on a broad basis the Indianmarket is not cheap, growth is certainly meaningful and I think continuity inpolicy and continuity in government will.

Attract global investors who havelargely stayed on the sidelines while looking at India with a lot of interest.So I think you're going to see more global capital come in, forced, youknow, an election outcome, a favourable election outcome.I do think parts of the market, small and mid-caps.One has to be thoughtful about the kind of valuations that that one is being.So I think one has to be selective in their thinking that.We know how India has benefited from investors looking for an alternative toChina. A lot of foreign money has beengravitating towards the market here.

But now with China showing some signs ofrecovery, might that money flow revert back to Beijing?I think, you know, and I attend a number of confidence level and I was adamant ina month ago and India versus China was a question mark.I don't think India is China plus one. I think India is a narrative of its ownand it's a growth model that is perhaps more similar to the U.S.or be it is, than more China. So I think global investors are nowstarting to see that there are differences between the India and Chinamodel. As I see China the world's secondlargest economy.

Valuations are certainly more favorablethan India, but uncertainty factors are significantly higher than India.I think with India you've got a steady base of continuity and growth momentum.So I see one as a turnaround and one is a sustained win.Of course, valuations are very different.So I think investors honestly, you know, have very, very different viewpoints onhow to look at India and China. But I don't think India is China plusone. Veronica, thank you so much for yourinsights today. Radhika Gupta, CEO and MD of EdelweissMutual Fund.

Let's do a check on how Indian marketsare doing. Of course, just early days yet.We're seeing, of course, the run up in the stock market yesterday, up more than3% today, but had some profit taking. We're pretty much seeing red across theboard, the Nifty down the most since March, the Sensex down the most sinceJanuary. Of course, as already mentioned, sheexpects the run up in India stocks to persist with policy continuity.If Modi comes back to power for another five years, plenty more ahead.Keep it here with us. This is Bloomberg.

And. Okay, Mike, let's take stock of wherethings stand in India. With vote counting now well underway.So you is interesting, right? I mean, I just read a headline sayingthat the Modi and his alliance are way ahead.But some other reports suggesting that perhaps the opposition is putting up avery good fight and hence we're seeing thatthe market reacting to it. Yeah, at the end of the day, nobodydoubts that the ruling party is in the best position to come back to power.But even now, what you mentioned, you.

Know, right now a difference of about70, 75 between the two seats right now does indicate that thereis a fight. Whether this is early trends or whetherthat sustains through to the afternoon will be interesting.But so far, what we are seeing of the trends are not actually matching up withthe exit polls, which gave the markets such a big bump on Monday.But some people say that the opposition did indeed put up a good fight this timeround. Unlike previous elections.They came together, work together, made sure that they had candidates in thedifferent states.

I think that's definitely true.I also think there is no complacency in the opposition this time.There is a sense that there is a fight to be fought for Indian votes, andthere's been a very sort of quick time responses to Prime Minister Modi'sstatements. We're also seeing today in the countingbooths, you know, letters have gone out to the opposition members to say, pleasebe at your counting booth till the end. Do not move if you see anything goingawry or you think there's some kind of trouble or over counting, please sendout videos, Get in touch. So there's a there's a proof of life, ifyou like.

Whereas in the past, we've sort of takenit for granted that the opposition will not really cohere together.So what are the chances that perhaps the exit polls were wrong, that perhaps theopposition is right in thinking it can get 292?Well, you know, exit polls in India are not like exit polls in other parts ofthe world in terms of they're done by different parties, they're done bydifferent television channels, often television channels, state party exitpolls as well. So it's not necessarily that they'reaccurate. But the general trend, what if that wereto change?.

That would be a big surprise.All right. So she hired a diplomatic editor with aHindu. Thank you so much for your time today.That is it from Bloomberg Markets Asia. We'll continue our coverage of theIndian election. The Indian count.Keep it here with us. This is Bloomberg.

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