Mr Narendra Modi, 62, the longest-serving Chief Minister of Gujarat (elected in October 2001) is gaining more support within the BJP national executive to be made its candidate for Prime Minister. Under India's parliamentary system parties do not always formally announce a candidate before an election, but usually project one figure as the likely PM to form government if the party wins. Modi has been tainted by religious riots in 2002 that killed more than 1,000 people, most of them Muslim. In December 2012 Modi won a third term as Chief Minister and has since been praised even by an influential conservative Muslim leader who said that Muslims were better off in Gujarat than in many states. Muslims form about 14% of India's 1.2 bn population and are the single largest minority in a country made up of about 80% Hindus. The riots made him a political "persona non grata", being denied a visa to travel to the U.S. and avoided by many Western diplomats. This is now changing with ambassador-level meetings from Britain and the EU. Modi has built a reputation for having business friendly policies and clean governance that have helped make Gujarat an exemplary state which has grown at an average annual rate above 10% for the last seven years (source: Government of India statistics). Gujarat is home to the largest oil refinery in the world owned by Reliance Industries. Modi rolled out the red carpet to Tata Motors to build its Nano car after Tata Motors had to pull out its West Bengal plant following protests from farmers there over land acquisition for the factory. Modi, if chosen by the BJP as its PM candidate, would probably fight Congress Party's Rahul Gandhi, scion of India's oldest political dynasty. Although the Congress Party has not formally announced Rahul Gandhi as its candidate he is a clear favourite. His mother, Mrs Sonia Gandhi, is Congress Party President. Gandhi's father (Rajiv Gandhi), grandmother (Indira Gandhi) and great-grand father (Jawaharlal Nehru) have all been ex PMs of India.

David Fuller's view That growth rate in Gujarat of over 10% during the last seven years is what India's entire economy sorely needs. Mr Modi's reputation for business friendly policies and clean governance help to explain his success. Will India's vast population vote for good economic governance or the multigenerational Gandhi dynasty in next year's important election?

I do not know but I think India's businesses and all investors interested in the country are likely to heavily favour Mr Modi. The result is likely to determine whether India's Sensex Index (weekly & daily) breaks decisively above its 2008 and 2010 peaks and records a significant bull run. Conversely, a Gandhi victory could disappoint investors, unless the Congress Party campaigns on a policy of credible economic growth.

Meanwhile, the Sensex Index has performed well over the last four weeks to test formidable resistance above 20,000. A clear downward dynamic is required to indicate renewed selling pressure near the former highs and a close beneath last month's lows would further delay an eventual upward break.



Additional commentary by Eoin Treacy