(Bloomberg) — India’s stock futures gained 1% after Indian Prime Minister Narendra Modi won crucial backing from two key allies in his coalition, allowing him to form a government and extend his time in power.
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June contracts on the benchmark NSE Nifty 50 Index advanced as much as 1% on Thursday, signaling Indian stocks may continue to retrace their election-related losses. Offshore Indian rupee non-deliverable forwards were steady.
After losing its majority in the parliamentary elections, Modi’s Bharatiya Janata Party was forced into coalition talks. Leaders of the National Democratic Alliance, including Nitish Kumar of the Janata Dal (United) and N. Chandrababu Naidu of the Telugu Desam Party, met in New Delhi on Wednesday to reach an accord and lend their support to the coalition.
Since taking office in 2014, Modi hasn’t had to share power in the government, and will likely have to make concessions to alliance partners, such as offering them important cabinet positions, to retain their support. A weak Modi-led coalition government will make it harder for him to enact strong economic reforms.
India’s Nifty 50 Index of stocks is up 4.1% year-to-date through Wednesday, compared with a 5.4% advance for MSCI’s Asia-Pacific gauge.
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