3 years of Modi govt: NDA betters UPA-2 in market returns

The BSE Sensex has gained 25.5% since the Narendra Moidi govt took charge in 2014

The benchmark BSE Sensex has gained 25.5 per cent during the first three years of the Narendra Modi government. The returns in the first two and half years were lacklustre. However, the markets accelerated 20 per cent in the past five months, after the Sensex had dropped to 25,807 on December 26, 2016, on concerns over demonetisation and the surprise victory of Donald Trump in the US presidential election.
 
The reform initiatives by the government, such as fixing of banks' stressed assets problem and implementation of a goods and services tax (GST) have boosted investor sentiment. While the gains have been supported by positive institutional investors' flows, analysts are still waiting for signs of sustained recovery in the economy and on corporate earnings.
 
"The government's measures are in the right direction. Despite the gradual and lopsided pace of recovery on the ground, the ongoing structural reform push, including enabling the implementation of GST, adoption of inflation targeting, new bankruptcy code, financial inclusion, liberalisation of foreign direct investment, measures to curb black money and encouraging digitalisation will help improve the productivity dynamics and lay the foundation for sustainable growth," says Tanvee Gupta Jain, economist, UBS Securities India.
 
The first three-year Sensex returns under the previous government, led by Manmohan Singh, were 15.4 per cent. However, the market gained 78 per cent by the end of its full term. It remains to be seen if the Modi government is able to top that.