Today marks eight years since Narendra Modi took oath as Prime Minister on 26 May 2014. The Modi government’s eight years include several huge announcements such as demonetisation, implementation of goods and services tax (GST), corporate tax rate cut, lockdown. Real Estate Regulation and Development Act, Insolvency and Bankruptcy Code (IBC), were some other reforms that were also introduced and implemented during this period. During these eight years, Indian stocks markets hit all-time highs with BSE Sensex touching 62,245.43 and NSE Nifty 50 scaling to 18,604. Interestingly, 13 out of 15 Sensex’ biggest intraday falls (points-wise) happened during these eight years.
Sensex, Nifty’s biggest intraday fall since May 26, 2014
The top five biggest market crashes, in terms of absolute points, happened in 2020 and are attributable to the news of the outbreak of Coronavirus. On March 23, 2020, Sensex witnessed its biggest intraday decline when it plummeted 4,035.13 points or a massive 12.71%. Nifty also saw the Biggest single-day fall in history that day as it fell by 1135.20 points or 13.0%. In these eight years, BSE Sensex’s market capitalisation has gone up from Rs 85 lakh crore to Rs 248 lakh crore.
How NSE sectoral indices, broader markets have fared under Modi Govt
Nifty Auto index has risen 69%, while Metals and Pharma indices have rallied 61% and 69% respectively from 26 May 2014 till today. Bank Nifty index has surged 129% and the IT index has soared over 200% during this period.
How markets behaved in response to major announcements by Modi govt
GST Implementation: The Goods and Services Tax bill was passed in the Parliament on 29th March 2017, following which Nifty rose 1.5% in one week, while Sensex rose 1.2%. The Act came into effect on 1 July 2017, following which the Nifty index rose mere 0.5% in a week.
Demonetisation: On 8 November 2016, the Modi government announced the demonetisation of all Rs 500 and Rs 1,000 banknotes of the Mahatma Gandhi Series. It also announced the issuance of new Rs 500 and Rs 2,000 banknotes in exchange for the demonetised banknotes. In one week following this move, Nifty tanked over 5%, while Sensex declined 4.2%.
Lockdown: In order to control the spread of Coronavirus in the country, Prime Minister Narendra Modi on 24 March, 2020 announced a nationwide lockdown. The announcement came a day after Sensex and Nifty witnessed their biggest intraday decline, falling up to 13%. In the week following the lockdown announcement by the PM, markets recouped some of the losses as both Sensex and Nifty rose around 10%.
How markets reacted to Modi taking charge in 2014 and 2019
2014: Benchmark indices Sensex and Nifty had hit a record high on May 16, 2014 as investors celebrated the Lok Sabha election results which showed that Narendra Modi would become the Prime Minister with a landslide victory. On the counting date, May 16, 2014, the BSE Sensex surpassed the psychological level of 25,000 for the first time, surging 1,470 points in intra-day, to hit the then lifetime high of 25,375.63, after result showed that the BJP-led National Democratic Alliance (NDA) was all set to form the next government at the Centre. Meanwhile, the 50-share NSE Nifty breached 7,500-mark to hit an all-time intraday high of 7,563.50.
2019: The landslide victory for Narendra Modi led-National Democratic Alliance (NDA) infused a sense of euphoria on Dalal Street on 24 May 2019, sending the stocks nearly 2% higher as the back-to-back sweeping victory marked a first for the single-party majority since 1984. BSE Sensex had ended 623 points or 1.61 per cent higher, while NSE Nifty closed the day 187 points or 1.60% up. When Prime Minister Narendra Modi began his first day of second term on 31 May, Sensex touched an intraday high of 40,122.34, a few points away from its all-time high of 40,124.96 recorded during the Lok Sabha elections result day. Nifty touched an intraday high of 12,039-levels.