Zeus: India climate plays in focus after Modi re-election debacle

Investors weigh clean energy vs. proven industry stocks as leader's third term begins

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Photo: Vikramdeep Sidhu/flickr.

(David Callaway is founder and Editor-in-Chief of Callaway Climate Insights. He is the former president of the World Editors Forum, Editor-in-Chief of USA Today and MarketWatch, and CEO of TheStreet Inc. His climate columns have appeared in USA Today, The Independent, and New Thinking magazine).

SAN FRANCISCO (Callaway Climate Insights) — India Prime Minister Narendra Modi’s re-election this week looked to remove a major uncertainty for foreign investors in the world’s largest emerging market after months of concern had led to steady outflows of international funds.

It indeed briefly sent the benchmark Sensex Index soaring to a new record high on Monday on hopes a strong performance by Modi’s BJP party would keep in place the strategies that had led to 8% economic growth last year and close to that this year. As election results became clearer in the past day or so, though, Modi’s victory was much thinner than expected, and his BJP barely kept its majority in parliament.

Markets reset amid the confusion about how much he might be able to actually maintain the economic momentum with a weakened government. This ties into the ever-changing nature of India’s climate promise and presents a choice of two types of sustainable investment strategies going forward.