In the span of last four years, Indian stock markets have fared considerably well as compared to regional Asian peers and Wall Street — the world’s largest equity markets by turnover. The benchmark equity index BSE Sensex has added about 10,000 points in the last four years breaching the key levels of 30,000 for the first time under Narendra Modi-led NDA government. The S&P BSE Sensex has gained as much as 9,970 points to 34,663 from a level of 24,693 as on 23 May 2018, before swearing-in ceremony of Narendra Modi as PM. Narendra Modi took sworn in as the 14th Prime Minister of India on 26 May 2014.
As Prime Minister Narendra Modi completes 4 years in the office on Friday, 25 May 2018, we take a look at four winning feats achieved under or proposed by Modi government that steered the domestic stock market to record high levels.
In November 2016, in a first of kind move, Prime Minister Narendra Modi announced a note ban on Rs 500 and 1,000 currency notes with immediate effect with an objective to eliminate black money out of the system. Following the move, Indian stock markets went down with benchmark Sensex slipping about 3%. But after round of weeks, equity markets started faring as the people parked a considerable amount of money in equities mostly through the mutual fund route. In the next 12 months, Sensex went on a raging run surging about 6,000 points.
Rs 2.11 lakh crore PSU bank recap plan
In October 2017, the Union Finance Minister Arun Jaitley announced a mega recapitalisation plan of Rs 2.11 lakh crore to revive the NPA-laden PSU banks. Following the development, the benchmark Sensex rallied about 2% to record high levels in a single day with India’s big state-run banks such as SBI and PNB rallying up to 45%.
World Bank Ease of Doing Business upgrade
In 2017, India got jumped 30 places and got ranked at 100th spot in World Bank’s Ease of Doing Business ranking 2018. With Narendra Modi’s dream of making and developing India to be one of the best nations among the developing countries, World Bank upgrade behaved as a catalyst and reflection of nation-wide implementation of reforms in as many as eight out of 10 fronts, including the crucial ones such as starting a business, paying taxes and resolving bankruptcy. The benchmark Sensex geared up more than 1% to record highs the very next day when World Bank upgraded India to 100th place in Ease of Doing Business.
Moody’s credit rating upgrade
Last but nowhere the least, the US-based credit rating agency Moody’s Investors Service upgraded India’s sovereign credit rating for the first time in last 13 years. Last time, the upgrade was done under the Prime Ministership of veteran BJP (Bharatiya Janata Party) Atal Bihari Vajpayee in 2004. Moody’s upgraded India’s sovereign credit rating to ‘Baa2’ with a stable outlook on the back of improved growth prospects driven by economic and institutional reforms.
“The decision to upgrade the ratings is underpinned by Moody’s expectation that continued progress on economic and institutional reforms will, over time, enhance India’s high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term,” Moody’s said in a statement.
Indian stock markets cheered the phenomenal achievement with the key equity index Sensex advancing nearly 400 points. This development also provided a boost to Indian rupee as on the same day rupee marked its biggest gain in last four years against the US dollar.