Pre-poll rally may have more fuel in the tank

Indian markets have made smart gains in the run-up to the general elections. Despite uncertainty, Sensex returns during the pre-election period have been positive six out of seven times. The pre-election rally (three months to the result day) during the previous Lok Sabha elections in 2009 saw the BSE Sensex gain 26 per cent, on two other occasions, it gained 14 per cent each. Compared to this, the index is up only 10 per cent so far since March. Experts suggest there could be more legs to the ongoing rally. Sustainability in foreign inflows and no negative surprises on the global and domestic fronts are crucial, they say.