Modi govt's first year performance 'overall good': Edelweiss

Says market has gone up over 60% in the recent years

Underplaying the recent sharp dip in the market indices, leading brokerage Edelweiss Capital has said the Narendra Modi-led government's performance is "overall good" in its first year.

"The market has gone up over 60 per cent in the recent years. Some correction is part and parcel of the market. At the present level, market is well-balanced," Edelweiss group chairman and chief executive Rashesh Shah told PTI.

On the first year performance of the Modi government, he said: "It has been overall good, especially on the reforms side. Having said that, let me add that I would like the government to start spending. Even within the budgeted spending level the government has more room to spend, which can really kick-start the economy."

Many corporates and fund houses have been blaming lack of policy reforms as the main reason for the fall the steep over 10 per cent fall in the market since April.

Capping their disappointments was the MAT tax notice sent to FIIs with retrospective effect sent out late March.

After the MAT notices were slapped on FIIs, they were on a selling spree, pulling out close to USD 2 billion from the equities and debt, destabilising the rupee.

While rupee lost more than 1 per cent year-to-date, the Sensex is down more than 10 per cent, spooked by what the marketmen say as lack of reforms (uncertainty on the new land bill and the GST Bill) and the tax terrorism.

But Shah does not believe so.

According to him, this is one of the best things to have happened to the market, which has close to 30 per cent FII ownership.

One of the positive outcomes of this FII selloff is that the domestic financial institutions are filling up the gap created by the selling by foreign funds, Shah pointed out.

"DFIs will create the fund flow and FIIs will create the gap, which is very good for the market, as FIIs' holding in the market has been on a record high," Shah noted.