Stock Market To Witness Strong Rally After Lok Sabha Election Results? Here's What PM Modi Said

Prime Minister Narendra Modi boldly forecast a strong run for the stock market after the election results were announced in a televised interview that aired on Sunday. In response to worries about market turbulence during the current elections, Modi gave his word that the markets will strongly rebound after the political unrest was settled.

"The day election results come out, and throughout that week, those who punch trades will get tired," Modi remarked, underscoring his belief that the markets would see significant activity and gains. He attributed the anticipated market surge to the economic reforms and pro-entrepreneurship policies implemented by his government. Modi highlighted the impressive growth of the Sensex, which has tripled from 25,000 points to 75,000 points under his administration.

Modi's comments come at a time when Indian equities have been experiencing considerable turbulence since the elections commenced on April 19. Concerns about whether the ruling National Democratic Alliance (NDA) would secure enough seats to continue its reform agenda have contributed to market volatility. The India Vix, an index measuring market volatility, has surged by 47 percent since the elections began.

The Prime Minister's optimistic outlook was echoed by senior Cabinet ministers who have been working to reassure the markets. Last week, Union Home Minister Amit Shah and External Affairs Minister S. Jaishankar both expressed confidence that the market jitters were temporary and would subside after the election results.

Finance Minister Nirmala Sitharaman also weighed in, emphasising that financial markets favour stability and predictability in policies and taxation.

Modi's remarks have been taken by analysts as a proof of his faith in a solid electoral mandate. "This is more of a commentary on the ruling party's confidence in coming back with a strong majority," said U R Bhat, co-founder of Alphaniti Fintech.

Markets don't take political statements very seriously until they result in the execution of particular policies or the distribution of funds to a specific industry.

In his interview, Modi also highlighted the broader participation of common investors in the stock market and encouraged increased investment. "The more common people invest in stock markets, the better for the economy. Additionally, each citizen's risk tolerance should increase," he stated. He also pointed out the recent rally in shares of public-sector undertakings as a positive sign.

Modi's comments follow a series of public reassurances from his administration aimed at calming market fears. At a rally last week, Modi praised the growth of the equity markets over the past decade and emphasised the increasing involvement of small investors. "Mumbai is India's economic powerhouse. See where the equity market was 10 years ago and where it is now. These days, the stock markets are accessible to millions of small investors. We are the fourth-largest stock market, and the trust of global investors is rising," Modi proclaimed, criticising the opposition for allegedly undermining this confidence.

Amit Shah and Jaishankar also sought to reassure investors. Shah suggested that the market corrections attributed to the elections were overblown and advised investors to buy stocks in anticipation of a post-election surge.

Jaishankar, addressing an event at the National Stock Exchange, expressed confidence that the markets would stabilise as the election results approached, despite ongoing debates over the exact seat counts.

Finance Minister Sitharaman, speaking at the Bombay Stock Exchange, reiterated that the markets value stability and should not be overly concerned about the election outcomes.

Meanwhile, a note from Investec suggested that the current election might not be driven by a single dominant issue, and the lower voter turnout could be due to a complex interplay of factors rather than an indication of a shift in political momentum.

As the nation awaits the election results, Modi's assurances and the positive outlook from his administration aim to bolster investor confidence and mitigate market volatility, setting the stage for a potentially strong market performance post-June 4.