India’s political action sent its markets soaring. After lagging global markets on fears of political unrest, the country’s investors finally have enough reasons to buy. The action could be just the beginning.

It is something that has never happened before. Trading at India’s stock market was halted early this morning after surging ahead by 17%. Thanks to a surprising electoral victory, regulators closed the market and told investors to come back tomorrow when jubilation calms.

India’s Congress Party alliance unexpectedly won 261 seats out of a total of 543 inside its Parliament. It means the country’s once-powerful communist parties are back in the minority and a pro-business, pro-growth government is taking the reins.

While restrictions currently remain on foreign investments and the government still owns large stakes in the country’s oil and banking industry, the election paves the way to a less-regulated economy and future growth.

The region’s analysts are predicting strong infrastructure spending and plenty of reforms. Add the spending and the capital-friendly reforms to a market that now has significantly less political risk to discount and you have a recipe for a strong, sustained bull run.

Investors are paying attention to the situation. Not only did the country’s equity markets surge, so did the value of the nation’s currency. The rupee made its biggest gain in over 23 years.  The action is trickling across the investing world today.

Is it wedding season already?

The Blackstone Group’s India Fund (NYSE:IFN) is up by close to 20% on the news. Rediff.com (NASDAQ:REDF), an Indian Internet provider, is soaring by over 35%. And just to show the gains are across almost all sectors, Sterlite Industries (NYSE:SLT), an Indian mining company, is up by over 20% as well.

Even with the today’s jubilation, investors must be cautious, especially if they believe the action will spread to all BRIC countries. Brazil, Russia and China were grouped with India during the recent economic boom, but now that things have soured the countries have great financial worries of their own.

Today’s news is purely political and will benefit companies working within India’s borders. It will do very little to change the fundamental economic problems facing the rest of the world’s moderate-growth markets.

Investors must remain cautious, but have every reason to be optimistic about India’s long-term success. This weekend’s political moves could be the start of sustainable pro-business growth. If capital begins to flow back into India as many investors are guessing it will today, the country could be set for several years of bullishness.

Now, if only the positive political action would shift to the Middle East.

Source: India’s Political Fog Begins To Rise