Prime Minister Narendra Modi, in a recent television interview, expressed confidence that the Indian stock market would experience a significant upturn following the announcement of election results on June 4. Addressing concerns about market volatility during the election period, Modi assured investors of a robust market performance once the results are out.
Modi remarked, “On the day election results come out, and throughout that week, those who punch trades will get tired.” He was responding to questions about market nervousness amid the ongoing elections and the widespread belief that the incumbent government would secure a majority. Modi emphasized that his administration’s extensive economic reforms and pro-entrepreneurship policies have been instrumental in strengthening the economy. He pointed out the remarkable growth of the Sensex, which has risen from 25,000 to 75,000 points during his tenure.
“The more common people invest in stock markets, the better for the economy. And the risk appetite of every citizen should rise,” Modi stated, highlighting the rally in shares of public-sector undertakings. He expressed optimism about the market’s future, reinforced by the government’s economic policies and the anticipated election outcome.
Indian equities have been volatile since the elections began on April 19, reflecting concerns that the National Democratic Alliance (NDA) might not secure enough seats to implement the expected reforms. The India VIX, a measure of market volatility, has surged 47% since the election started, indicating heightened investor anxiety.
Modi’s reassurances came after similar statements from senior Cabinet ministers, all emphasizing market stability. Analysts, however, noted that Modi’s comments were more about showcasing the ruling party’s confidence rather than directly impacting market movements. U R Bhat, co-founder of Alphaniti Fintech, stated, “Markets don’t take any political statement too seriously unless it translates into specific policy implementation or sector allocation.”
In a rally last week, Modi lauded the equity market’s growth over the past decade, noting, “Mumbai is India’s economic powerhouse. See where the equity market was 10 years ago and where it is now. Lakhs of small investors today are connected to the stock markets. We are the fourth-largest stock market, and the trust of global investors is rising. The Opposition alliance wants to break this faith.”
Union Home Minister Amit Shah and External Affairs Minister S Jaishankar also addressed market concerns, attributing the recent market turbulence to election-related jitters. Shah emphasized that market corrections were normal and not solely due to the elections, advising investors to consider the current period as a buying opportunity. Jaishankar echoed these sentiments, expressing confidence in the election’s direction and predicting reduced market volatility as results near.
Finance Minister Nirmala Sitharaman, speaking at an event at BSE, underscored the preference of financial markets for stability and predictability in taxation and policies. She assured that there was no need for markets to be anxious about the election outcome. “This election, we believe, is not a wave election where a single dominant issue or theme is driving voter sentiment. The much talked about drop in voter turnout in 2024 could be due to various factors and may not necessarily tilt the scales in favor of any one party,” she explained.
A note from Investec reflected this view, suggesting that the interplay of multiple factors, rather than a single dominant issue, was influencing voter behavior and market sentiment.
As the election results approach, investor focus remains on the government’s potential to continue its economic reforms and the overall stability of the Indian financial markets. Modi’s reassurances, coupled with statements from other senior ministers, aim to bolster investor confidence during this uncertain period.
