Investment in Modi stocks is declining
When Prime Minister Narendra Modi returned to power at the Centre for the third time, there were many stocks from infrastructure to defence sector which were expected to outperform. But now there seems to be some change in the market scenario regarding these stocks. That is why many investors are now seen staying away from these stocks. Let us understand this whole story…
CLSA popularised an index of such stocks called ‘Modi Stocks’. It included stocks of those companies that were affected by the Modi government’s decisions. In such a situation, the movement of these stocks now shows how the attitude of investors is changing.
This was the scenario during his 100 days in office
According to an ET report, as the 100th day of the Modi government’s third term has come to an end, there has been a rise of just 2 per cent in ‘Modi Stocks’. In contrast, consumer stocks have seen returns of 20 per cent and software stocks have seen returns of up to 34 per cent since the formation of the government in June.
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One reason for investors to stay away from Modi stocks is the results of the 2024 Lok Sabha elections. The BJP has not secured a clear majority in these elections and is a coalition government. In such a situation, the government recently reversed many of its decisions, which sent a message of uncertainty among investors and they started staying away from those stocks that are directly related to the government’s decisions.
Recently, the Modi government had withdrawn an advertisement for direct procurement. At the same time, divided opinions were observed within the government on the broadcasting bill. In such a situation, the coalition government’s message of uncertainty has been sent among the people. At the same time, in the government’s decisions, the focus seems to be increasingly on agriculture and the consumer sector rather than on infrastructure. This is affecting these actions of Modi.
It gave a 24% return before the elections
Just before the elections, the returns of the “Modi stocks”, influenced by the policies of the Modi government, were tremendous. These stocks had registered a huge growth for the fourth consecutive year. While in the first five months of 2024, the index of Modi stocks rose by 24 percent. Prime Minister Narendra Modi stressed on increasing the infrastructure capacity in the country. At the same time, emphasis has been laid on enhancing the capabilities of government-owned undertakings (PSUs). Therefore, the stocks of all these companies registered a huge growth.
