The Narendra Modi-led NDA government is set to complete its second year in office on Thursday. Many market experts can term the two-year period as fruitful in terms of slew of reforms and initiatives the government has taken during the tenure so far. But for Dalal Street, the promised ‘Acche Din’ is yet to materialise.
Consider this, in the past two years, benchmark index BSE Sensex gained marginally 2 per cent to 25230.36 on May 23, 2016 from 24716.88 on May 26, 2014. According to market experts, global cues in the form of China yuan devaluation, US interest rate hike worries and crude oil price spooked markets during the period. During the period, the index touched a high of 29681.77 on January 29, 2015 and low of 22951.83 on February 11, 2016.
Among the sectoral indices on the Bombay Stock Exchange (BSE), the BSE Healthcare index slid the most — 34 per cent, followed by BSE Consumer Durables (down 31 per cent), BSE IT (down 23 per cent), BSE TECk (down 19 per cent) and BSE Auto (down 18 per cent). On the other hand, BSE Metal index, BSE Realty index and BSE Oil & Gas index surged 69 per cent, 38 per cent and 26 per cent, respectively.
17 components in the Nifty 50 index gave positive return to investors with BHEL, ONGC and Hindalco surging 118 per cent, 95 per cent and 69 per cent. On the other hand, Eicher Motors, Aurobindo Pharma, IndusInd Bank and Asian Paints plunged 61 per cent, 60 per cent, 48 per cent and 45 per cent, respectively.
Siddharth Oberoi, founder, Prudent Equity said, “The reason behind the poor show is largely related to global cues. Earlier, valuations had been bid up very high initially with the hope that major changes would be unleashed by the new government. Hence, the valuations were stretched and had started factoring in expected earnings before hand. The Government could not do any major structural changes which could have led to sustainable earnings growth. Although, the economy was helped by lower crude prices, low commodity prices, reduced inflation and stable Rupee”
Foreign institutional investors remained net buyers in the Indian equity markets as they bought shares worth of Rs 82866 crore in the past two years till May 23.
Ajay Bodke, chief executive officer and chief portfolio manager, Prabhudas Lilladher said, “The government’s focus on massive injection of funds to kick-start investment cycle through sectors like roads and railways as well as focus on reviving rural demand to address rural distress as a result of two successive monsoon failures is already showing early signs of success. Combined with the fillip being provided to consumption-led demand as a result of 7th Pay Commission and OROP, we feel the market which currently appears to be indecisive will sooner rather than later take note. We believe all the ingredients for a strong, long-term upmove are in place and the arrival of an ‘above normal’ monsoon as predicted by the IMD and private weather forecasters will act as the trigger for takeoff”.
On the macro-economic conditions, Harshavardhan Neotia, president, FICCI said, “The macro-economic situation has seen a lot of improvement and we are on a firm footing to accelerate growth further. Government has made an earnest effort to address some of the most pressing challenges at hand in order to strengthen the key levers of the economy. India’s GDP has witnessed a steady increase and is expected to grow at a healthy pace even amidst a fragile global economy. Inflation has been range bound with the government. Further, the resolve to stick to the fiscal deficit target has send a positive message to the international community.”