According to Credit Suisse, there can be four scenarios post elections, Narendra Modi led NDA government with 2-3 allies; Narendra Modi led NDA government with 5-6 allies; other leader led NDA government with 8-10 allies or Third Front government supported by Congress.

Elections in India are unlikely to kickstart investment cycle in a short period of time as against popular perception that a new government led by BJP Prime Ministerial candidate Narendra Modi could immediately revive the markets and economy, says a Credit Suisse report according to the PTI.

“We disagree with the consensus view that elections can revive the investment cycle. Only a fourth of projects are stuck with the central government, and two-thirds of these are in power and steel, both wracked with massive overcapacity,” the research report says. According to Credit Suisse, there can be four scenarios post elections, Narendra Modi led NDA government with 2-3 allies; Narendra Modi led NDA government with 5-6 allies; other leader led NDA government with 8-10 allies or Third Front government supported by Congress.

In the first scenario, the rally in the market is likely to continue (assuming supportive global cues) “for 2-3 months till market participants realize Government’s inability to drive rapid changes and 1QFY15 results temper optimism,” the report said. In the second case, there is likely to be a temporary lull in the market (flows-wise) till a post-poll alliance gets stitched up and given Modi at the helm, sentiments are likely to remain positive.

In case of other leader led NDA government, markets are expected to take negatively to “No-Modi” at the Centre and a potentially unstable government and in the Fourth case there would be “unwinding of the beta rally as apprehension of a rating downgrade emerges.” According to the global brokerage major, new government is not likely to revive investment in the power generation for two reasons: (1) overcapacity and lack of power distribution reform; and (2) slow growth in coal production. Going forward there can be three distinct phases in the market: (1) the runup to the election results; (2) the three month period after elections; and (3) the period till the year-end, said Credit Suisse report.