Nine years of Modi government: Nifty, Sensex jump 150%, m-cap grows three-fold
The nine-year stint of Prime Minister Narendra Modi has been a period of strong growth in the Indian stock market despite the challenging years of the Covid-19 pandemic. The last nine years of the Narendra Modi government have seen equity benchmarks the Sensex and the Nifty surging by 150 per cent while the overall market capitalisation of BSE-listed firms more than tripled, or jumped by ₹195 lakh crore, in that period.
Sensex was at the level of 24,716.88 and Nifty50 was at 7,359.05 on 26 May 2014 when Modi became the Prime Minister of India for the first time. Sensex is now near the 62,000 mark while Nifty is eyeing the 19,000 level. The cumulative market capitalisation of BSE-listed firms stood at ₹85,20,816.63 crore on May 26, 2014; on May 25, 2023, the overall market capitalisation of BSE-listed firms was ₹2,80,33,373.63 crore.
Among the sectoral indices, the Nifty IT index surged 219 per cent while the Nifty Financial Services index surged 213 per cent in that period.
The Nifty Private Bank index jumped 196 per cent, the Nifty Bank index jumped 188 per cent and the Nifty FMCG index jumped 180 per cent in the Modi government’s nine-year regime.
Nifty Energy index (up 140 per cent), Nifty Auto index (up 116 per cent), Nifty Realty index (up 94 per cent), Nifty Metal index (up 86 per cent) and Nifty Pharma index (up 67 per cent) rose in that order during the period.
The period of the Modi government saw India’s economy growing on average at a strong pace of about 6-7 per cent every year. Morgan Stanley believes India is “on track to become the world’s third-largest economy by 2027, surpassing Japan and Germany, and have the third-largest stock market by 2030 due to global trends and key investments the country has made in technology and energy.”
Moreover, India’s GDP could more than double from $3.5 trillion today to surpass $7.5 trillion by 2031, Morgan Stanley says.
Analysts point out that the Modi government’s policies such as Make In India, performance-linked incentive (PLI), focus on foreign direct investment, etc., have been the major triggers that have given a boost to the Indian market and economy.
Modi’s regime so far has been marked by a major thrust on infrastructure projects, pro-business reforms, financial inclusion and financial reforms. Al this, along with political stability, has been positive for the market. Many analysts say that the market’s perception of Modi is pro-business
Many top analysts highlight that the brand Modi has a strong influence on the stock market.
In its latest ‘Greed and Fear’ report, Jefferies’ Christopher Wood underscored one obvious worry for the market over the next 12 months will be the inevitable questioning of the current consensus, namely that Modi will be re-elected.
After this, another potential risk is a further reduction in retail investor activity following a period when the stock market has traded in a tight range. Wood pointed out that the active brokerage accounts have declined from a peak of 38 million in June 2022 to 31 million in April 2023.
Wood, who is the global head of equities at Jefferies, believes that it is only a matter of time before Sensex reaches 100,000 level. He further added that the Indian stock market will continue to climb the proverbial wall of worry.
“This target, on a five-year view, now assumes a trend of 15 per cent EPS (earnings per share) growth and that a five-year average one-year forward PE (price-to-earnings) multiple of 19.8 times is maintained,” said Wood.
Disclaimer: The views and recommendations given in this article are those of individual analysts and brokerage firms. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 26 May 2023, 01:44 PM IST
