Modi and the BJP-led coalition look set to win some 340 of the total 542 seats, and the BJP alone is likely to cross the half-way mark once again, winning close to 290 seats which is higher than its count in 2014.

While the voters have spoken, not everyone is on the same page when it comes to the success of Modi’s first term. Some of his policies seem impulsive, such as the snap decision to remove high-value banknotes from circulation in 2016. Meanwhile, the country’s unemployment rate is at its highest level in decades, despite Modi’s 2014 election pledge to create millions of much-needed jobs. However, others point to a slew of crucial large-scale reforms, such as the nationwide roll-out of the Goods and Service Tax (GST) and a new bankruptcy code. India has certainly become an easier place to do business during Modi’s tenure.  

The prospect of political stability and continuity buoyed local currency and stock markets earlier in the week, when exit polls predicted Modi’s victory, before the euphoria subsided and assets retraced their steps. 

What Modi's victory means for investors: view from the investment desk 

“This is a positive development for India. With a probable clear majority in the upper house of the parliament, the BJP has a historic chance to take forward the reform agenda it had embarked on in the last five years. Some of the tough economic decisions taken, such as sticking to fiscal prudence and inflation control, implementation of the GST, and the new bankruptcy code, have had an adverse impact on growth in the last couple of years. However, the government now has an unprecedented opportunity to build on the base it has created to revive the economy in its second term.

"Recent events such as the liquidity crunch in the non-banking financial sector, have also had a short-term impact on consumption. The market expects the new government to address these issues and put the economy back on a path to growth. Given the ongoing clean-up in public sector bank balance sheets as well as the reduction in corporate debt levels, I expect the private sector capex cycle to revive in the next 12-15 months.

"Overall, I expect that this historic mandate for a strong and decisive government will help take India’s reform process forward and improve the country’s growth prospects. The equity market has reacted positively after the exit polls suggested a BJP victory, and given that we have seen flat earnings growth in the last five years, the market is likely to start discounting an earnings revival in the next few months.” - Sandeep Kothari, Portfolio Advisor, FF - India Focus Fund

“A comfortable majority for the ruling Modi government is positive in the medium term as the continuity of the current government is important to maintain the pace of fiscal and financial reforms, the focus on infrastructure development and the implementation of large-scale public benefit schemes. 

"The markets were already expecting a majority for the current government after the exit polls last week and as a result, I don’t expect them to move up sharply in the short term. But there are short term negatives in terms of non-banking finance company (NBFC) and real estate stress and a consumer spending slowdown, which will put pressure on corporate earnings. We need to wait for an earnings recovery to see a meaningful upside in markets from here.
"I remain selective on stocks and generally cautious on markets in the short term, but I am positive on the medium- to long-term outlook given the growth potential, demographic profile, and strong business models run by very competent management teams.” - Amit Goel, Portfolio Manager

"The result was better than markets had been expecting in the build-up to the election, but markets have given back some of the gains since the exit polls were announced. Now that there is a prospect of a stable government, and potentially a majority in the parliament, the focus will shift to the Modi government’s ability and willingness to implement important labour and land reforms. However, these reforms will be challenging in a backdrop of slowing growth and higher inflation through rising food prices and a meaningful increase in the oil price, a headwind for the world’s largest energy importer.

"Generally - the economic outlook does not look great. Our Global Economic Activity in Real-time (GEAR) indicator has trended down to be consistent with 6.5 per cent growth over the past two quarters. This is disappointing, and is nearing the bottom of its multi-year range, following subdued GDP prints in the third and fourth quarter.

"The good news in all of this is that there is scope for rates to be cut, which should help to some extent. From a market perspective, valuations remain in the higher end of the range relative to other emerging markets, but investors have generally been neutral on India, so there is some scope to add back to positions now that election uncertainty has passed.

"Overall, while the secular growth story remains intact, the short to medium term outlook is challenging, and highly dependent on implementation of reforms, and the trajectory of growth and inflation." - Ayesha Akbar, Portfolio Manager, Multi Asset