ANALYST VIEW: India's Congress alliance set to win polls

(Reuters) - The ruling Congress-led alliance was projected on Saturday to win a second term in office after a general election, according to vote counting trends from the election commission.

Analysts say this would cheer markets as the coalition government would not need the support of leftist parties that have blocked liberal reforms and opposed foreign investment, particularly in the financial sector.

Leftist parties had propped up the government of Prime Minister Manmohan Singh for four of its five years in power but they withdrew support after India signed a civilian nuclear deal with the United States despite protests from communist allies.

Following are some analyst views:

ALASTAIR NEWTON, SENIOR POLITICAL ANALYST, NOMURA, LONDON:

"We can now at least be hopeful that we're going to see a stable government that can push through some structural reforms without worrying about opposition from the left.

"You can't detach India from the bigger picture of the global context. But we expect that if these reforms are put in place, then India can get to 10 percent growth over the next decade."

V. ANANTHA NAGESWARAN, CHIEF INVESTMENT OFFICER, JULIUS BAER, SINGAPORE: "It will be positive for the markets initially, but that reaction will be short-lived because of global factors.

"A lot of hard work lies ahead for the new government. They have less of an excuse for going slow on reforms this time because the Left isn't there. Their stand on economic policy and reforms can't be worse this time -- it will be the same or slightly better. The only concern is if populism dominates the fiscal and economic policy."

PHANI SEKHAR, FUND MANAGER, ANGEL TRADE, MUMBAI:

"A government without the Left is a positive outcome for markets. The new government's policy is going to be vastly different, especially in the case of reforms in the financial services sector and privatization of select state firms.

"Now that the uncertainty over the government is out of the way, investors can once again focus on the domestic economy, global factors and have a long-term view."

SAMIR ARORA, FUND MANAGER, HELIOS CAPITAL MANAGEMENT,

SINGAPORE:

"This is a dream for the market. You could not have thought of anything better than this. Get ready for a 7-8 percent rally in the stock market on Monday.

"I don't expect them to do full-scale privatization. On reforms, what they were prevented from doing last time around, this time they will not be. So expect them to start off with some financial services and stronger pension reforms."

SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI

"It will help them pick up the pace of reforms as like-minded parties form the government, lending greater stability and ability to carry out reforms at a faster pace. Market sentiment and business confidence will find support."

J MOSES HARDING, HEAD OF GLOBAL MARKETS, INDUSIND BANK,

MUMBAI:

"It is more or less a clear mandate. So it should be positive for all the markets.

"Congress has to depend less on other parties. They can continue their focus on growth. The first half of the borrowing program should go smoothly. Foreign investors will likely come into India now. This should help stocks and the rupee.

"There could be some problem with money supply growth, which could put pressure on inflation. That is the only negative."

RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI:

"This would give a sense of political stability and continuity. All looks well for the reform program to gain momentum once again. Markets will take this as positive news. There would be more confidence in the markets. This would help retain investment from FDI and FII inflows.

"The budget now will focus on the disinvestment program. The budget will also look at infrastructure spending and fiscal consolidation. Economic slowdown means less tax receipts, so they have to look at disinvestments to bridge the gap."

SRINIVASA RAGHAVAN, HEAD OF TREASURY, IDBI GILTS, MUMBAI:

"Manmohan Singh seems to be getting a free hand. A government at the center without the support of the parties with narrower national outlook is very much supportive for the markets.

"Stocks will rally, bond yields will ease. I expect the government to continue its softer interest rate policy. In fact, more easing can be expected.

"The insurance and pension sectors will be further opened up for foreign investments. Both FDI and FII investment will get a boost. Increased investments in infrastructure and other key sectors will keep growth on track."

SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES,

MUMBAI

"There's a positive and a negative -- UPA without left will be more positive for economic reform, but the provisions in the Congress manifesto will keep the fiscal deficit high."

GAJENDRA NAGPAL, CEO, UNICON FINANCIAL, NEW DELHI

"I am pleased with the outcome in the sense that this has set the stage for reforms in the next five years. Reducing fiscal deficit, opening up of sectors like insurance are the need of the hour. I think the markets will take it positively and you will definitely see a gap up opening on Monday."

V.K. SHARMA, HEAD OF RESEARCH, NAGRAM STOCK BROKING,

AHMEDABAD

"The results are a pleasant surprise, after the fractured exit polls we saw. The best part is regional parties have become non-players. I expect Congress to continue with reform programs in the absence of the left. The markets will give it a thumbs up on Monday. You might see a gap up opening to the tune of 7 percent."

LINKS:

Election Commission: eciresults.nic.in

BACKGROUND:

- About 714 million of India's 1.1 billion people, or more than twice the population of the United States, were eligible to vote in the world's biggest democratic exercise.

- Hundreds contested the 543 seats in the lower house.

(Reporting by Mumbai and Delhi bureaux; Editing by Himangshu Watts and Jerry Norton)