The country’s stock market wealth has grown by nearly Rs 50 lakh crore in three years since the Modi government was voted to power, with huge gains of over Rs 1 lakh crore each for big corporates like Tata, Birla, Ambani and Bajaj groups.
Financial sector and industrial conglomerates like HDFC, ICICI, L&T, Vedanta, Godrej, Mahindras, Hinduja and ITC have also gained big with a sharp jump in their market valuations during this period, which is being termed by some market experts as the ‘Modi Rally’. At the same time, the gains have been relatively ‘uneven’ for the public sector companies with some of them actually seeing a dip in their investor wealth while others have registered a huge jump.
The overall gain for state-run companies forming part of the BSE PSU index is estimated at about 22 per cent or Rs 3.65 lakh crore — which is less than 8 per cent of the total three-year gain of about Rs 50 lakh crore for the across-the- board stock market wealth since the NDA alliance was voted to power in May 2014.
The PSUs as such account for over 16 per cent of the overall stock market wealth in India. An analysis of the stock market movements in this period shows that the stock market benchmark Sensex has gained over 6,000 points or nearly 26 per cent, while the overall stock market has grown from little over Rs 75 lakh crore to more than Rs 125 lakh crore now.
The experts, however, flagged that a big chunk of these huge gains are actually in the accounts of the promoters themselves, while foreign portfolio investors and domestic institutional investors have got the next biggest share.
The average shareholding of retail investors in Indian companies is relatively less at less than 10 per cent and therefore their share in the overall gains would be relatively smaller. As per a survey commissioned by the capital markets regulator Sebi, just about 8 per cent households in urban India invest in stocks while those investing in mutual funds are also less than 10 per cent.
The rural households have less than 1 per cent investors. The situation is so bad in rural areas that just 1.4 per cent are aware about stocks and mutual funds. In these three years, Mukesh Ambani-led Reliance Industries has gained nearly Rs 1 lakh crore in market capitalisation — the total value of all listed shares — to about Rs 4.5 lakh crore with a gain of about 30 per cent.
Younger brother Anil Ambani-led Reliance Group has also seen a surge in value of some group firms like Reliance Capital, but sharp dip seen by companies like Reliance Communications has offset the gains. For Adani group also, the gain has been over 30 per cent with the investor wealth soaring to over Rs 1.1 lakh crore.
Billionaire industrialist Kumar Mangalam Birla-led group has also seen its market value growing by about Rs 1 lakh crore to nearly Rs 3 lakh crore. For Bajaj group’s five listed firms, the gains amount to Rs 1.7 lakh crore, while HDFC Group’s three listed firms have seen their total market value growing by more than Rs 3 lakh core to close to Rs 6.7 lakh crore.
Tatas, with a large number of listed companies, have seen their overall market value growing by about 20 per cent or about Rs 1.45 lakh crore to Rs 8. 55 lakh crore with TCS alone accounting for a gain of over Rs 92,000 crore.
Among other major groups, Vedanta group has gained nearly Rs 75,000 crore, L&T group by about Rs 60,000 crore, Godrej by about Rs 50,000 crore and Mahindras by about Rs 35,000 crore. Besides, Hinduja group has also gained substantially, while the surge has been good for ICICI Group, ITC and Bharti Airtel as well, as per the analysis based on market capitalisation data of the top stock exchange BSE and the three-year performance data from Morningstar.
Market experts said the rally has been impressive while looking at the overall figures, but it has also been ‘uneven’ as some traditional sectors like banks, telecom, power and auto have not done that well and the IT space has also seen the momentum slipping in recent months. However, the analysts finding the rally ‘uneven’ were not willing to be named and the head of a leading brokerage house said they do not want to “pick holes in this impressive- looking rally” as their clients may get concerned.
He admitted that the brokerage houses are smartly indulging in re-allocation of funds to ensure gains for their clients and for themselves as well. Asked about the sectors having benefited the most during the three years of Modi government, Yes Securities’ Senior President and CEO Prasanth Prabhakaran said the NBFCs in housing finance space have done extremely well.
“Apart from housing, NBFCs have also gained market share from the space left vacant by the PSU banks, as priority shifted in the PSU bank space from credit to normalisation of NPAs,” he added.
Vinod Nair, Head Of Research at Geojit Financial Services, said banks have been beneficiaries of major policy actions of government like financial inclusion, demonetisation, affordable housing schemes to name a few.
He said the government is moving in the right direction to strengthen the PSU banks by favouring merger of weaker small banks to much larger banks, while the proposed NPA resolution mechanism will help tackle the bad loan crisis.