India Stocks May Suffer Election ‘Blip,’ Says HDFC

Indian stocks may halt their second- quarter rally unless the next government attracts foreign investment to revive the economy, said HDFC Standard Life Insurance Co., the country’s sixth-largest private insurer.

The ruling Congress party-led coalition may have won the most seats without securing enough votes to form a government, based on exit polls after a five-week election that ended yesterday. SGX CNX Nifty Index futures slumped the most in two weeks in Singapore while Indian stocks traded in the U.S. sank.

“The election outcome will only be a blip,” Prasun Gajri, chief investment officer at HDFC Standard Life, which manages $1 billion in equities, said in an interview in Mumbai yesterday. “It isn’t the only determinant for the market. It may impact the markets for a month or two but nothing beyond that.”

The Bombay Stock Exchange Sensitive Index, or Sensex, was the worst performer in the first quarter among the so-called BRIC markets that also include Brazil, Russia and China. The gauge rebounded 24 percent in the second quarter, beating benchmark indexes in Brazil and China.

“The rally has been too fast, too soon,” Gajri, 37, said. While the economy has shown signs of an improvement, investors will need to watch for more data, he said.

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