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Imho, Meddler has it spot on. The Congress has to govern with the support of the Left and cetain aspects of the REFORM policy might now slow down, other aspects may be junked altogether. For instance, privatization of OIL PSU's (Public Sector Undertakings) may be junked. Further, foreign investment in the insurance sector may be capped at current levels. Labour reform, too, might not take off. On the plus side, much needed land reform should take place.
Manmohan Singh is expected to be the new Finance Minister and he is a genuine reformer...the guy who introduced reforms in India in 1991, junking decades old socialistic policies. P.Chidambaram is also likely to be a prominent canbinet member who favours liberalisation. All in all, therefore, nothing to get worried unduly about. I would use corrections to buy undervalued growth cos in the pharma, auto-ancillary, IT services/BPO, consumer goods/retail sectors. Obviously, for the medium to long term.
Just one other thing. The sell off was exacerbated by foreign hedge funds who were mandated to sell Emerging Asia. The sell off in the entire Asian region has been on for the last couple of weeks.
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