Global equity research and investment banking major Morgan Stanley said in a report that the political class seems to be disillusioned with the current environment with regard to the progress on the economic reform front.
However, the market continues to remain largely dependent on global cues and political issues are most likely to take a backseat when it comes to the movement on the bourses in the near term, India-based economists Ridham Desai and Kuleen Tanna said.
Morgan Stanley said that most of the senior politicians it met do not anticipate any major progress in reforms over the coming months. However, in a longer-term perspective, it is important for India to fix its political inertia and lack of polarity in electoral verdicts, given the correlation between the strength of the government and the economic development, it added.
The recent trend on the bourses shows a strong correlation with the global economic events, while domestic geo-political issues have largely been discounted by the market.
While events like trends in global crude oil prices, rate hikes by the US Federal Reserve and end of zero-rate policy in Japan have been some of the major drivers of the domestic
stock market, events like putting divestment issues on the back burner have gone largely unnoticed on Dalal Street.
The recent trend marks a significant departure from the patterns witnessed a few years ago when political issues and reform-related decisions of the government used to play a significant role on the bourses.
Earlier in 1991-92, liberal economic policy initiatives undertaken by the then Finance Minister Manmohan Singh were cited as the major drivers of the 1,000-point rally in the benchmark Sensex from 1,000 to 2,000.
Similarly in 1990, good monsoons were one of the major factors in the first ever thousand-point journey of Sensex to the 1,000 mark.
Again in February, 1992, when the market breached the 3,000-point rally, a market-friendly budget by then Finance Minister Manmohan Singh was the major driver, while a liberal export-import policy was the key driver in the jump to the 4,000 mark in March, 1992.
A pure political event like the BJP-led coalition winning the majority in Lok Sabha elections was cited as the major force by market players when the Sensex reached the 5,000-point mark for the first time ever in October 1999.
However, political issues started taking a backseat on the bourses in the Sensex journey beyond the 5,000-point mark.
The much-hackneyed IT boom was the major driver in the 1,000-point jump to 6,000 level in February 2000, while the settlement between Ambani brothers was the major event in the journey to 7,000 level in June 2005.
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