While Indian voters may still be undecided about who to support in the 2014 general election, foreign investors expect a regime change in India.

More and more foreign brokerages are advising clients Narendra Modi will likely lead the Bharatiya Janata Party (BJP) to form a coalition government in 2014.

Typically, clienteles of brokerages are cash-flush foreign institutional investors that own around 45% of the entire floating stocks in the Indian equity markets.

Brokerages have indicated to their clients that Modi’s rise could well be positive for both the investor community and the re-emergence of the India growth story.

Japanese brokerage Nomura is the latest to echo Modi–the next PM view, along with prominent peers like CLSA, UBS, Bank of America-Merrill Lynch, Goldman Sachs and HSBC.

Nomura’s political analyst, Alastair Newton, has already gone on record that corporates and markets expect a BJP-led coalition in New Delhi.

On Monday, the brokerage stated in its advisory that a “BJP-led coalition is likely to win power, which may be positive for the economy in the medium-term.”

Foreign brokerages are convinced that Modi’s business-friendly approach and strong corporate governance as Gujarat’s chief minister will hold him in good stead when the role gets elevated to that of the country’s PM.

In his weekly newsletter ‘Greed & Fear’, Christopher Wood, strategist at CLSA Asia Pacific Markets, wrote last week: “India’s electorate is pining for a change and, in particular, the return of a government focused on a growth mandate rather than a mandate based on the promise of more handouts on the ‘alleviation of poverty’ theme...”

In its 2014 outlook for Indian equities, HSBC Capital Markets, too, talked about opinion polls predicting a BJP win.

“Currently, mostly all opinion polls... point to the BJP emerging as the largest party. In our view, if the BJP-led National Democratic Alliance (NDA) comes to power, it would be positive for the infrastructure-led sectors,” wrote Jitendra Sriram, equity strategist and head of research-India, at HSBC Securities and Capital Markets.

The general perception among the electorate, foreign brokerages are telling their clients, is that the Congress has become a freebie-doling party, given to populist measures like the food security bill and policies aimed at boosting consumption.

Gautam Chhaochharia and Sanjena Dadawala, analysts at UBS Securities, noted that based on discussions with investors, the markets appear to be inclined more towards a Modi-led BJP than Gandhi-led Congress.

Modi–the next PM discourse started in May 2012 when CLSA first published a report to that effect.

Last week, CLSA reinforced that view by saying that Modi’s popularity is reflected in the vast turnouts at political rallies, a contrast to Rahul Gandhi’s.

Although most brokerages prefer the BJP, they, nevertheless, feel that markets and the economy would like to see a strong and stable government at the Centre — be it the Congress or the BJP.

“We believe India’s political climate in mid-2014 can make or break the longer term economic outlook,” said Sonal Varma, economist at Nomura. Although most brokerages prefer the BJP, they, nevertheless, feel that markets and the economy would like to see a strong and stable government at the Centre — be it the Congress or the BJP.

“We believe India’s political climate in mid-2014 can make or break the longer term economic outlook,” said Sonal Varma, economist at Nomura.