Mumbai: The rally in Dalal Street may continue if a stable government is formed at the Centre, but major gains are unlikely as markets have already factored in poll outcome partly as visible from recent rise in indices.
"Markets are likely to react positively if a stable government is elected, but it might have already partly priced in a positive outcome based on the opinion polls," a Standard Chartered report said.
Ruling out wild movements in the currency market either ways following the poll outcome, the report said while equity markets have reacted strongly to unexpected electoral outcomes in the past, currency market reaction has been muted on such instances.
Analysing economic policies of Congress and BJP, the report said both the parties have a lot in common in their economic policies and said economic liberalisation will continue regardless of which party forms the next ministry.
"The Congress and BJP share similarities in their broad economic ideologies. They have similar, though not identical, views on opening up the economy to trade and capital inflows, financial sector reforms, private sector participation, and providing macro stability through lower twin deficits," it said, adding economic policy is likely to continue regardless of the election outcome.
It, however, said, "if a coalition of regional parties forms the next government, markets may have to wait for some time to understand its economic stance, which could mean a period of uncertainty."
On the pace of policy implementation, it said the track record of BJP-led NDA coalition from 1998-2004 suggests that it will focus more on implementation, which could benefit infrastructure and industrial development.
