Markets may react positive on cabinet reshuffle

MUMBAI: If the BSE Sensex reacts to sentiments, then Sunday's cabinet reshuffle - a combination of youth and experience - is expected to send strong and positive signals and may even bridge the gap further between India's political and business capitals, often seen at loggerheads in the recent past.
By entrusting a former Wall Street banker to re-energise India's battered power sector or by mandating a Wharton School alumnus to break the Parliamentary logjam over the Companies Bill, UPA II clearly wants to get back in action.
"A good momentum has begun in the last few months with the change of guard in the finance ministry. Now with key economic ministries under Congress' control, it should make an even bigger difference," hopes Ramdeo Aggarwal, JMD, Motilal Oswal.
Fund managers and market pundits echo the sentiment while admitting that the markets have already factored in some of the good news. "The positive sentiment has already been generated by pace of reforms announced recently and now markets will look at tangible action on ground related to these," feels Nilesh Shah, director, Axis Direct.
"Giving more opportunity to younger MPs in some key ministries would bring in the needed push for carrying through the reform initiatives, which could have a long-term bearing on the economy," adds A Balasubramanian, CEO, Birla Sun life Mutual Fund.
A change of guard at the petroleum ministry is also expected to reverse the fortunes for Reliance and its flagship gas acreage at KG D6. "Veerappa Moily takes practical decisions. He has clearly been given a job to clear the mess surrounding India's upstream sector. This is a huge positive for the Reliance stock which has consistently underperformed largely due to the KG-DG overhang. I think we can now expect quick resolutions in gas price revisions and also approvals in the capex plans," says Deven Choksey, MD, KR Choksey Securities.
A senior oil analyst with a leading FII breaks it down thus: "Under Jaipal Reddy, the petroleum ministry had become ultra cautious. For the minister, protecting the sanctity of the office had become paramount, as that was the main problem under the previous dispensation. Reddy made sure nobody could point fingers at him. Therefore, nobody was taking any commercial decisions. It was not a clash of personalities, but a case of caution turning counter-productive," he says on condition of anonymity as he is not authorised to speak to the media.
With Andhra Pradesh getting the maximum representation in the new Cabinet, many expect Hyderabad's entrepreneurs - GMR, GVK, Lanco Infrastructure - to gain in influence.
Most of these poster boys of India's infrastructure story have been besieged by policy paralysis, lack of feedstock, rising interest rates and harsh regulatory scrutiny.
"I would not say representations from a single state will make things different, but with Congress in charge of key portfolios and a bunch of Gen Next leaders coming in, I expect the government on the whole to take charge," says Isaac George, Group CFO, GVK.