Prime Minister Narendra Modi has expressed confidence that both the BJP and the stock market will reach new heights on June 4, the day the Lok Sabha election results will be announced. A pre-election rally that has already pushed the stock market to a record market capitalization of $5 trillion.
In an interview with ET’s Pranab Dhal Samanta, PM Modi said, “Our investors are well aware of the pro-market reforms we have implemented. These reforms have created a robust and transparent financial ecosystem, making it easier for every Indian to participate in the stock markets. I can say with confidence that on June 4, as BJP hits record numbers, the stock market will also hit new record highs.”
PM Modi pointed out that when he first took office in 2004, the Sensex was at the 25,000 mark and has since tripled to nearly 75,000, demonstrating the trust the stock market has in the BJP government’s performance over the past decade.
PM Modi also highlighted the increase in the number of demat accounts from 2.3 crores to over 15 crores and the rise in mutual fund investors from 1 crore in 2014 to 4.5 crore today as evidence of citizens’ growing confidence in the Indian economy.
He noted that this broader base of domestic investment is a result of the financialization of savings that has taken place over the last 10 years, with domestic investors playing a more significant and active role in the markets than ever before.
The election season has witnessed a significant outflow of over Rs 37,000 crore by Foreign Institutional Investors (FIIs). However, domestic, retail, and High Net Worth Individual (HNI) investors have not only capitalized on the market dip but have also pushed the market close to its all-time highs once again.
PV Subramanyam, a seasoned investor in the Indian stock market, highlights that the market often disregards external influences and follows its own course.
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“Markets have always been talked up by the then government, but sometimes the market chooses not to listen. So, you have to be careful about the fact that the market does not listen to anybody. It has its own mind. After it comes down, people will say, fairly obvious, now how long can the bull run be? So, it is difficult to think that the market will listen to the big bosses,” he said.
Historical data indicates that the impact of election results on the stock market is typically short-lived, lasting no more than six months, an ET report has said. The market eventually reverts to its inherent trajectory, which is primarily driven by fundamental factors. However, the Bharatiya Janata Party (BJP) remains the preferred choice among market participants, and a potential victory by the INDIA alliance could lead to a market de-rating.
Sandip Sabharwal, a prominent market expert, cautions, “If the government changes, the one-day dip could be as much as 15% also.”
