How Modi Government Reforms Impact Stock Market

By | October 2, 2018

We all witnessed how Narendra Modi-led NDA forming the government in 2014 with a strong majority and support across the nation. But do you know how Modi government reforms impact stock market trends?

Not only in India even the whole world was amazed to see one of the strongest contenders has won the election and become prime minister of India. Modi-led NDA government’s prime motive was only to develop the nation and eradicate corruption. 

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Modi government has tried to raise foreign direct investment(FDI) in the Indian economy. It has also increased spending on infrastructure and reduced spending on healthcare and social welfare programs. Modi tried to bring efficiency in the bureaucracy by centralizing power.

Modi government reforms impact stock market greatly as it has renewed focus on reforms. Furthermore, the proposal to implement goods and services tax (GST) and measures by the government to boost agricultural income as well as productivity.

This government act awesome in the past 3 years like promoting Make in India, demonetization, GST, RERA and much more.

You will be reaping the benefits in the coming years in the form of GDP growth, fiscal discipline, curbing black money and maintaining inflation.

Read Also: How RBI’s Monetary Policy Impact Stock Markets



How Modi Government Reforms Impact Stock Market Trends

Indian government’s policy initiatives and the BJP’s win in the Uttar Pradesh elections also triggered hopes for long-term political stability in the country.

It actually reinforced investors’ faith in the reforms process since and the Modi-led (NDA) government came to power at the center.

The government’s policy initiatives and the BJP’s win in the Uttar Pradesh elections also triggered hopes for long-term political stability in the country.

It actually reinforced investors’ faith in the reforms process since and the Modi-led (NDA) government came to power at the center. 

Economic reforms like Goods and services tax (GST) and hopes of political stability drove market participation. Furthermore, it boosts the confidence of domestic and foreign institutional investors.

Key Impact of Reforms On Stock Market

The huge inflow of liquidity from mutual funds (MFs), FIIs and DIIs greatly impact the stock market in a positive way. Everyone is talking about growth and suddenly the whole world is bullish in India

Really Modi government reforms impact stock market trends and some stocks doubled in the last three years. Stocks like Bajaj Finserv, Rajesh Exports, gave more than 200% returns.

Furthermore, TVS Motor Company, Piramal Enterprises, HPCL, and Bharat Electronics also gets doubled.

Despite geopolitical concerns, hawkish US Federal Reserve, the Indian stock market surged to record highs. You were able to beat benchmark index by a wide margin in last three years if you have invested in mid and small-cap stocks.

Since the Modi government came to power and the reforms initiated all the midcap and small cap stocks run a lot. The stocks have been able to deliver awesome returns in the last three years and keep the momentum going.

However, over the past year or so, we have seen a bull run in Indian stock indices. It is because of robust foreign fund inflows and strong domestic investor participation.

The stock market is positive due to the government’s several reform initiatives and future plans to boost economic growth.

Fundamental Macro Factor – Political Front

Modi government reforms impact stock market trends and so your earning. Government reforms are one of the fundamental macro factors which affect stock movements.

Hence, keep an eye on government activities before you invest in the stock market. You may not like politics but you must aware of it to make money from stock trading and investment.

Furthermore, it boosts the confidence of domestic and foreign institutional investors. Demonetisation which banned high-value notes dented sentiment a bit.

Despite demonetization, market momentum picked up especially after BJP win in Uttar Pradesh elections.

Earnings have also shown growth besides note ban and the stocks continue its rally. Indian stock market with benchmark indices Sensex and Nifty currently hovering around record highs.

Stocks have rallied massively in the last three years with 11 stocks gaining a huge 1000-1800% in the period. Around 200 stocks have gained over 100-1000% in these three years.




Have a look at 50 stocks and Modi Government Reforms Impact Stock Market

Sl. No. Stock Name Stock Price  (27 June 2017) Stock Price (26 May 2014) % Change
1 Ducon Infratechnologies Ltd 34.25 0.31 10948
2 Kushal Tradelink Ltd 184.05 3.6 5013
3 Uniply Industries Ltd 302.8 5.72 5194
4 Medicamen Biotech Ltd 553.25 10.84 5004
5 Fiberweb (India) Ltd 322.3 7.73 4069
6 Mangalam Drugs and Organics Ltd 159.05 6.08 2516
7 Stylam Industries Ltd 770.15 25.8 2885
8 Goyal Associates Ltd 5.72 0.2 2760
9 SVP Global Ventures Ltd 393.75 13.49 2819
10 Star Paper Mills Ltd 198.45 9 2105
11 National Fittings Ltd 242.2 11.49 2008
12 Tasty Bite Eatables Ltd 4,758.35 240 1883
13 Sagar Productions Ltd 13.5 0.64 2009
14 Cupid Ltd 278.5 14.39 1835
15 Prima Plastics Ltd 263.4 15 1656
16 Capital Trust Ltd 373.4 20.95 1682
17 Suyog Telematics Ltd 345 20.62 1573
18 Cambridge Technology Enter. Ltd 91.25 4.65 1862
19 Sat Industries Ltd 25.65 1.65 1455
20 Moschip Semiconductor Tech Ltd 51.25 2.78 1744
21 Emmbi Industries Ltd 186.2 12.07 1443
22 Pondy Oxides and Chemicals Ltd 426.65 28.95 1374
23 Caplin Point Laboratories Ltd 563.35 35.43 1490
24 NGL Fine-Chem Ltd 388.25 24.5 1485
25 Kingfa Science and Technolgy Ltd 724.1 48.78 1384
26 Vama Industries Ltd 20.05 1.5 1237
27 Kellton Tech Solutions Ltd 109.6 8.42 1202
28 Axtal Industries Ltd 69.70 5.59 1147
29 V2 Retail Ltd 248.9 15.8 1475
30 Dwarikesh Sugar Industries Ltd. 412.45 34.3 1102
31 Padmalaya Telefilms Ltd 11.44 1.11 931
32 CMI Ltd 211.6 15.62 1255
33 Rushil Decor Ltd 766.45 58.6 1208
34 Avanti Feeds Ltd 1376.6 107.23 1184
35 Astec LifeSciences Ltd 560.85 44.55 1159
36 Shri Keshav Cements & Infra Ltd 178.05 16.55 976
37 Associated Alcohol and Breweries Ltd 120.45 9.73 1138
38 Mold-Tek Packaging Ltd 280.85 24.53 1045
39 Minda Industries Ltd. 600.45 47.14 1174
40 Indo Count Industries Ltd 165.6 14.43 1048
41 Websol Energy System Ltd 110.6 10.61 942
42 Brawn Biotech 69.8 5.55 1158
43 Coral Laboratories Ltd 588.05 92.95 533
44 Lactose India Ltd 121.25 10.86 1016
45 Amulya Leasing and Finance Ltd 308.00 30 927
46 Gini Silk Mills Ltd 386.75 32.35 1096
47 Shiva Texyarn Ltd 330.55 27.15 1117
48 Sarda Plywood Industries Ltd 264.2 17.48 1411
49 Chaman Lal Setia Exports Ltd 96.25 8.92 979
50 Nettlinx Ltd 89.65 9.13 882

 

If I missed something out of government reforms, then let us know in the comments section.

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Published on: Oct 16, 2017

2 thoughts on “How Modi Government Reforms Impact Stock Market

  1. nadeem ahmad

    what will happen after 2019 elections? if bjp wins or loose ,whatever it may be then what will be the impact on the share market

    Reply
    1. Ratan Kumar Post author

      If Modi govt wins 2019 election convincingly, then the market will move up. However, you never know what will happen but one thing is certain that market may go down for short-term only. It may give you even negative return but you have to keep investing in good and strong fundamental stocks. Election results benefit you for short-term only. So, act like smart investors to survive in the stock market and keep investing for long-term.

      Reply

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