Markets will have a strong run after June 4, says PM Narendra Modi

Prime Minister Narendra Modi, in a television interview telecast on Sunday, said the stock market would have a strong run once the election results are out.

“You see, the day election results come out, and throughout that week, those who punch trades will get tired,” Modi said, responding to a question about whether the markets were displaying nervousness regarding the election outcome after pricing in the return of the incumbent government with a brute majority.

“Our government has implemented maximum economic reforms and pro-entrepreneurship policies to strengthen the economy. We started at 25,000, and now the Sensex has reached 75,000 points. The more common people invest in stock markets, the better for the economy. And the risk appetite of every citizen should rise,” said Modi. He said the shares of public-sector undertakings were also rallying these days.

Indian equities have been turbulent since the elections began on April 19, amid concerns that the ruling National Democratic Alliance (NDA) would not get the required numbers to carry out the far-reaching reforms the markets were expecting. India Vix, a gauge of market volatility, has gained 47 per cent since the beginning of the elections.

Modi’s assertion that equity markets are rallying follows assurances by three senior Cabinet ministers regarding the stability of the markets.

Analysts termed the PM’s statement another reassurance of regime continuity and said markets won’t move much unless some market-moving initiative is announced.

"This is not so much of a comment on the market. This is more of a comment on the ruling party’s confidence on coming back with a strong majority. Markets don’t take any political statement too seriously unless it translates into something specific in terms of policy implementation or allocation to a particular sector,” said U R Bhat, co-founder of Alphaniti Fintech.

Earlier last week, addressing a rally, Modi lauded the growth of equity markets in the previous 10 years.

“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,' said Modi.

Last Monday, Union Home Minister Amit Shah and External Affairs Minister S Jaishankar separately had said market turbulence caused by election jitters was transitory and that markets would bounce back after the results.

Shah had said markets had fallen more steeply in the past, and it was unfair to attribute this to the elections. Shah went on to say that even if markets have corrected a bit due to some rumours, he would suggest investors buy stocks as markets are going to shoot up after June 4.

Foreign Affairs Minister S Jaishankar, while addressing an event in NSE last week, had said he was confident of the direction of the elections and that markets would become less turbulent as the results were closer.

“The exact number of seats people may debate, and in a democracy, they should also be debating it. But I'm sure that as round after round occurs, markets will also become less volatile,” said Jaishankar.

At an event at BSE on Tuesday, Finance Minister Nirmala Sitharaman had said financial markets prefer stability and predictability when it comes to taxation and policies and that there is no need for markets to be jittery about the election outcome.

“This election, we believe, is not a wave election where a single dominant issue or theme is driving the voter sentiment and reckon the much talked about drop in voter turnout in 2024 could be an interplay of various factors and may not necessarily tilt the scales in favour of any one part," said a note by Investec.

Markets will be closed on Monday due to general elections.