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Sensex returns lag under the Modi regime
May 25, 2015

Let us shift our focus from brand & brand equity to government & government performance. The Modi government completed its first anniversary recently. With all the euphoria that was created during elections expectation was sky high. However, the view so far on performance is split amongst masses. While some say that new government is anti-farmer and has just indulged in sloganeering one quarter of India Inc is happy with the initiatives that are taken to revive growth. This is more of a sentimental evaluation. But when it comes to assessing the performance on quantitative basis stock markets are apt benchmarks since they are a barometer of the economy.

As seen in today's chart the one year performance of Indian stock markets under the Modi regime has been dismal with returns of just 6%.

However, poor returns should be seen in the context that markets had already priced in huge expectations from the new government well in advance. And that euphoria has been frittered away recently as Modi premium is slowly fizzling out. While it is too early to judge the performance of any government in one year, markets made up their mind over it. Also, India's underperformance has got a lot to do with FIIs pulling out money of late as they were significantly overweight on India. This portfolio rebalancing exercise has led to a correction in markets.

While the one year returns have lagged so far it would be interesting to see how the performance will be after Modi government completes its first term in 2019.

Hope you have had a chance to listen to Vivek Kaul's analysis of the government's performance in the past year.

Data Source: LiveMint
Phil $=Philippines

This Chart Of The Day was published in The 5 Minute WrapUp - Stop eating 'Maggi'! But don't stop owning it...

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