Investors have big hopes pinned on Narendra Modi, India's new prime minister-designate.
India's benchmark Sensex index has surged more than 10 per cent over the past two weeks, hitting a succession of record highs amid hopes that the economy is about to get a big boost.
But is new political leadership, and the fresh ideas it brings, really worth betting on – in India, or anywhere?
Much of the new-found enthusiasm for Indian stocks comes from the fact that Mr. Modi's victory was a landslide. His outright majority is the first for an Indian political party in 30 years, providing him with a strong mandate for change. Indeed, change is key to his appeal: India's economic growth has lagged China's largely because of economic mismanagement under previous leadership.
Mr. Modi intends to spur employment and growth, partially by attracting greater foreign investment with reformed labour laws.
Jim O'Neill, formerly the chief economist at Goldman Sachs, told the Economic Times last week that reforms should boost growth expectations to more than 7 per cent in a year, with the potential for 10 per cent growth over the longer term.
The optimism has a familiar ring.
After Shinzo Abe was elected Prime Minister of Japan in 2012, he brought a bold economic agenda. Dubbed "Abenomics," it was designed to rescue Japan from two decades of deflation and a series of demoralizing recessions.
Initially, investors were happy to jump on board his plans. The country's benchmark Nikkei 225 embarked upon an astonishing 90 per cent rally within a year.
But investor optimism has a habit of sputtering when big plans meet reality. Following a stellar 2013, the Nikkei 225 has since slumped more than 11 per cent this year.
"To us, this is a sign that Abenomics is losing investor confidence," said strategists at Pavilion Global Markets, in a research note.
What's also likely is that investors price in change very quickly, and then wait for the facts to catch up to their optimism.
If so, then the rally in Indian stocks could take a breather. Reuters reported that Deutsche Bank downgraded Indian stocks to "neutral" from "neutral/overweight" relative to other emerging markets, arguing that valuations appeared "very stretched."
But any bet on new political leadership is daring, given the complexities of most political and economic landscapes.
India is certainly no exception. States wield tremendous power, corruption is entrenched and infrastructure is woefully inadequate – presenting tough obstacles to economic reforms. What's more, changes can wither in the face of a popular backlash – and any reforms may last only until the next election.
In other words, betting on a new political leader is nothing like betting on a new chief executive of a struggling company. Change occurs at a slower pace, and there are many more moving parts.
However, if you do like to add a political dimension to your investing strategy, why not take a value approach and bet on a struggling country that has not yet embarked upon bold economic reforms?
France comes to mind. Growth is among the slowest in Europe, its budget deficit is huge and unemployment is in the double digits. Its President, François Hollande, has spoken about reforms earlier this year, but the market is not reflecting much hope.
The benchmark CAC 40 has risen with signs of a modest recovery in Europe but is still 27 per cent below its prefinancial crisis high in 2007.
Or, for a more outlandish bet, there's always Russia. The MICEX is down 4 per cent this year with a stalled economy and Vladimir Putin's disruptive foreign policy.
The index trades at less than seven-times earnings, implying plenty of room for a rally should Mr. Putin change his ways.
It's not a safe bet, of course. But politics rarely is.