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The country will hold elections to its lower house of parliament between April 16 and May 13. However, according to fund managers, no matter which political party is elected, it is likely to have little effect on the markets, as previous differing governments have opted for similar economic policies.

Hugh Young, managing director of Aberdeen Asset Management Asia and manager of the group's £59m New India Investment Trust, said: "The elections, like many in the past, will have a limited impact on the economy. Despite having vastly different ideologies, the last two governments both pushed for further economic deregulation, and we expect the next one to do the same." 

His opinion that the political climate will have little effect on the economy was echoed by Mark Mobius, manager of the £908m Templeton Emerging Markets Investment Trust.

He said: "A coalition will probably have to be formed to run the government, and such coalitions would not normally result in drastic changes. I do not expect drastic policy changes – coalitions require consensus among many disparate views, and this will result in a steady continuation of current policies." 

But Dennis Eldridge, client portfolio manager at the JPMorgan Asset Management Asian desk, said a "third front" government led by a loose coalition of regional parties could have a distinct negative impact, as a similar situation occurred during the mid-1990s.

All managers were in agreement that the long-term prospects for the Indian economy were strong and that the country was only behind China when it came to growth in the Bric economies.

Areas in particular where the managers are bullish include banks, with Mr Young citing HDFC Bank, which has a strong balance sheet and well-established brand, particularly in consumer banking. He also holds Infosys, India's top IT company, which has strong engineering capabilities and remains very competitive globally.

Mr Mobius said he was also keen on technology.

"Currently, the consumer sector is interesting, but even the software technology area is attractive in view of the decline in prices of companies in that sector."