• Monday, June 24, 2024

Business

Modi assures stock markets over election numbers, says all records will be shattered on June 4

Downplaying the reported nervousness in the stock markets ahead of D-Day, the Indian PM said stock market programmers would get tired of the action after the results are announced.

Indian prime minister Narendra Modi (Photo by Saeed Khan-Pool/Getty Images)

By: Shubham Ghosh

AS the fifth phase of India’s national elections went underway on Monday (20), prime minister Narendra Modi in an interview to a television channel said the Indian stock markets will break all previous records on June 4, the day results of the ongoing elections come out.

Downplaying the reported nervousness in the stock markets ahead of D-Day, the prime minister told NDTV that stock market programmers would get tired of the action on the day the results are announced and throughout the same week.

He also added that in the last decade, the market hit the 75,000 level from 25,000.

“The more common people invest in stock markets, the better for the economy. And the risk appetite of every citizen should rise,” Modi was quoted as saying as he pointed to the rally in public-sector companies that underscored his government’s efforts towards bringing maximum economic reforms and pro-entrepreneurship policies to make the economy stronger.

Read: Indian celebs vote as Mumbai goes to polls

It was only days before that Amit Shah, India’s home minister and the second most powerful leader in Modi’s Bharatiya Janata Party (BJP) after him, assured the stock investors and advised them “to buy before June 4”.

He also suggested that the market will shoot up after June 4 predicting a clear sweep for the BJP and its allies in the elections.

There are reports of nervousness in the market amid concerns that the Hindu nationalist party of PM Modi could see a truncated victory in the marathon seven-phase election which kicked off on April 19.

Read: India holds fifth phase of national elections on May 20

Nomura India showed recent opinion surveys to suggest a win for the BJP and continuity of its policies post the current elections. As far as the reform agenda over the next five years is concerned, the firm predicts a sustained effort on infrastructure spending and push in the manufacturing sector, besides financial consolidation.

“The government may focus on the more politically contentious reforms around the factors of production including land, labour and capital; judicial reforms; and simplifying direct and indirect tax administration, including bringing electricity, oil and gas and alcohol under the GST ambit. The government is also likely to further focus on improving the ease of doing business for foreign investment and laying the groundwork for next generation sectors,” it said, according toa Business Today report.

MUFG Bank said as long as Modi’s party wins a majority of seats in the Lok Sabha or Lower House of the parliament, markets should view the outcome of the Indian elections positively over time.

“There could be modest knee-jerk weakness in INR FX and risk assets if BJP loses some seats and maintains a majority,” it said, the Business Today report added.

“Conversely, a greater seat share win by the BJP compared with 2019 (>303 seats) would increase the ability to pass more contentious structural reforms in land, labour and the agriculture sector, and will be perceived much more positively by markets, with INR FX and risk assets likely rallying in the aftermath,” it said.

Should the BJP secure victory, Mirae Asset anticipates keen scrutiny of the July Budget for potential alterations in direct and indirect taxation, MSP policy adjustments, and shifts in MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) payments.

Looking ahead, emphasis is expected to shift towards long-term initiatives such as infrastructure development, farm legislation, skill enhancement programmes, and bolstering manufacturing employment to stimulate demand in rural sectors, as outlined by Mirae Asset Capital Markets.

In a recent statement, PhillipCapital expressed optimism for a robust market rally if the BJP-led National Democratic Alliance achieves its widely publicized target of 400-plus seats in the 543-member parliament. Conversely, should the NDA secure a lower range of 300-330 seats, resulting in a market dip, PhillipCapital views this as a strategic buying opportunity.

The brokerage also spoke about keeping a close watch on subsequent election phases, suggesting that any downturn in voter turnout could impact both election outcomes and equity markets, the Business Today report added.

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