Indian shares have rallied to record highs on hopes upcoming elections will spur reforms, but the optimism may be misplaced.
The lead up to elections - and sometimes an aftermath with decisive results - has spurred solid rallies before, Deutsche Bank said in a note.
"These rallies have almost inevitably fizzled though as the reality of running a large, complex, and noisy democracy set in," it said. "We just don't think an election can be as big a game-changer as the markets want to believe presently," it added.
Surveys suggest that the ruling Congress Party, the party of Mahatma Gandhi, will be unseated by a coalition led by the Bhartiya Janata Party (BJP) in the election, which is expected to start on April 7 and finish on May 12.
Markets clearly have an optimistic view of the election: The Sensex is up more than 4 percent so far this year, running ahead to record highs and bucking declines in many regional peers.
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