CLSA, the Hong Kong based investment bank said that the upward rally of the Indian stock market is due to optimism regarding Modi government getting reelected. The firm also predicted that the market will touch a new high if the BJP comes back to power. The market rally would be directly proportional to the scale of BJP’s majority. The investment group analyzed the post-election scenario and said the Congress led government would lead to an initial sell off in the markets. The worst case scenario would be if the third front or unstable coalition comes to power. It would lead to double digit decline in stock markets.
“Optimism from foreign and the domestic investors have pushed up the Nifty multiples to now 6 per cent above 1sd (standard deviation) levels. This shows that the current opinion polls are factored in to some extent,” said CLSA. The India stock market reached to highest ever tally in the month of March given investors’ confidence that Modi government would be reelected. The opinion polls predicted the same and the investors factored it in the portfolio allocation.
The investment by Foreign Portfolio Investors (FPIs) poured in 34,053 crore rupees in the month of March. This is the highest ever monthly inflow in the history of Indian stock markets. Riding on foreign investment, Sensex surged most ever since FY 10. Sensex gained 17.3 percent in FY 19 while Nifty 50 gained 15 percent which is highest ever yearly gain in the history of National Stock Exchange.The performance of the Indian stock market was best among major markets of the world. Other markets in Asia performed very poorly compared to India. South Korean market shed 12.48 percent value in the same time period while China shed 2.47 percent value. The performance of the developed countries’ markets was also not as good as India with French market gaining 2.8 percent, British market 2.84 percent and German market shedding 5.33 percent value.
Earlier Indian born Canadian billionaire PremWatsa has joined the long list of industrialists and investors who have praised the reformist policies of Modi government and batted for its second term.
In an interview with columnist and author Suhel Seth, Ratan Tata, the ace industrialist and former chairman of the Tata Group had shown confidence in Prime Minister Modi. On being asked about the leadership of Prime Minister, Tata said that Modi is capable of delivering the ‘New India’ that he has promised to the people of the country.
R. Narayana Murthy, the pioneer of Indian IT industry reasoned for another term of the Modi government. In an interview with ET Now, Murthy said, “We must be grateful that there is at least a national leader of Modi’scalibre who is interested in improving India. Looking at last 5 years, I feel that having a leader who is focussed on nation, focussed on discipline, cleanliness, and economic progress is a good thing. Continuity of govt would be a good thing.”
In the last four and a half years, PM Modi has taken many path-breaking steps to modernise the Indian economy. The steps include demonetization, GST and IBC. The Modi government has been able to take forward the Indian economy along with the development of the people at the grass-root level which is why CLSA is optimistic about his government. Also, steps like construction of toilets, Ujjawala Yojna etc. have received praises of the corporate leaders and people across the political spectrum.
