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updated on 12 may 2017
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Why Nifty rallied 30 percent in 3 years of Modi govt
• Why Nifty rallied 30% in 3 years of Modi govt
Retail investors have nothing to complain as the Nifty rose over 30 percent in 3 years of Modi government in office while 10 stocks more than doubled investors’ wealth in the same period.
The much talked about ‘Acche Din’ are already here for investors and if the momentum continues, which is more likely the case, equity markets could well rally another 20 percent from the current level in the next 2 years of Modi government.
The broader index registered over 30 percent growth since May 16, 2014, when Narendra Modi-led NDA emerged victorious in the General Elections of 2014. During the same period, the S&P BSE Sensex rose 25 percent in the same period.
In the last three years of the Modi-led NDA government, fundamentals of the Indian economy has improved tremendously which makes India stand out among its peer group.
There are many reforms which the government initiated in order to kick start the economic engine ranging from GST, Direct Benefit Transfers, passing of various bills to inject life in Real Estate and Banking sector, Make in India to promote manufacturing, encouraging start-up culture and curbing the supply of black money etc. among others.
Stocks in the Nifty index, which more than doubled investors’ wealth, include names like Eicher Motors, Indiabulls Housing Finance, Maruti Suzuki, Yes Bank, IOC, BPCL, IndusInd Bank, Bosch, Asian Paints, and Kotak Mahindra Bank.
The rally in the Indian market is led by strong domestic and global liquidity. Domestic institutional investors (DII), which include mutual funds, have poured in more than Rs 1 lakh crore in Indian equity markets since May 2014 while foreign institutional investors (FIIs) bought just Rs 30,000 crore worth of equities in the same period, according to data from Moneycontrol.
The recent vertical rise seen in Indian equity market from December lows does raise the concern of high valuations, but analysts’ are not worried. The valuations of most of stocks and indices do look stretch from a historical perspective but as the economy grows, earnings growth will catch up.