Investors signal renewed hope in India

The results of the Indian elections have led to a market surge in the Asian nation, with foreign investors including those from the UK upping their exposure to stocks.

Sensex, the main index on the Bombay Stock Exchange, shot up by 17 per cent on Monday following the news that the ruling Congress party had won a decisive victory - and rose again today.

The victors had previously signalled support for a freeing-up of certain trade rules including those on privatising state-owned assets.

This would potentially allow for a more flexible economy and big investment opportunities for private banks and other institutions.

Moreover, the wide margin of the election win will almost certainly mean that Congress will not have to rule in coalition with the Communist parties in India - who take a tougher line on foreign trade.

Speaking to the BBC, Hitesh Agrawal, head of research with Angel Broking, said: ’This was the big bang event that investors were looking for.

’We expect the government to have greater flexibility to boost economic reform and growth from here on.’

However, some analysts have struck a more sceptical note.

Writing in the Financial Times today, Gideon Rachman said that Indian democracy had its ’ugly side’ and that the nation still faces ’serious threats to its internal stability’.ADNFCR-2318-ID-19176542-ADNFCR