``In the last three to four years political uncertainty was a key market moving factor, though now markets have almost factored in instability,'' said Prem Khatri, vice-president of Kothari-Pioneer Asset Management Company.``The markets have learnt to live with the contradictions of a coalition government and even if no party wins a majority in the latest round, there would not be much impact on market mood,'' Khatri said. Emphasising that stock markets had begun to focus on the fundamentals of the economy and corporate performance of late, Khatri said the brief reaction to the Kargil crisis was again a pointer to the market's growing maturity.

Dwelling on the various sectors of the economy, Kothari-Pioneer feels that chances of yet another good monsoon would further boost rural incomes, which in turnwould improve sales growth for the fast-moving consumer goods segment. With signs of economic recovery fairly strong, the FMCG sector would see a positive impact in the current fiscal with most companies targetting a larger rural reach by beefing up distribution network and increasing ad-spend, the fund felt.

Indications that the Kargil tussle may not lead to a full blown conflict between India and Pakistan will temper negative impact of the imbroglio, Khatri said. However, the conflict had introduced an element of volatility to the market and was expected to affect foreign fund flow in the short-term, he added. On the high-demand infotech segment, the company expects a consolidation phase in the medium-term in the absence of any strong support from foreign funds.

``However, by this time next year these scrips will again return centre-stage as a result of robust profit growth,'' he said adding that the fundamentals of the top firms in the IT sector continued to be strong. Kothari-Pioneer, a joint venturebetween Kothari group and US-based Pioneer, also sees high growth in pharmaceutical company shares notwithstanding any upheaval on the political horizon. ``The possible opening up of health insurance and India's signing the patents agreement are two factors that may improve profitability of drug companies substantially,'' Khatri said.

Moreover, penetration levels of health care can only go up now and in the medium-term semi-urban and rural population will start getting newer drugs, he said.