Modi govt feeds the fire into market

The Narendra Modi-led government certainly seems to have ‘Modi-fied’ the way investors look at markets. Since the day of the counting for the General Elections took place (May 16) till date, the Sensex has given a return of 14.73 per cent, while the Nifty has given a return of 15.12 per cent.

For the year till date (January 1, 2014-December 26, 2014), the BSE Sensex has given returns of 28.67 per cent while the Nifty has given a return of 30.08 per cent.

So, what exactly led to this rally? According to Kotak Securities CEO Kamlesh Rao, the rally was led by a pick in the growth cycle for  the country.

 “Today’s prices in the stock market are a reflection of tomorrow’s profits. Indian markets have witnessed a buoyant trend that indicates better profit growth prospects for 2015. This seems to be the start of a golden era, not just for the markets, but also the Indian economy,” Rao said.

“Many factors have fallen in place for Indian markets and the economy. India is the only major country that is projected to see a pickup in growth momentum. The growth cycle moved from slowdown to a recovery mode, last seen in 2009.

And the industrial sector is expected to lead this recovery. This may start out gradually, but growth will pick up speed in the coming years,” Rao said. Rao added that growth in the markets is likely to continue going forward as well.

“The Indian markets have outperformed its Asian and global peers. The Sensex is now up over 30 per cent, a whopping 7,000 points this calendar year. Our market remains the hot investment option. And this growth is expected to continue as cyclical, rate-sensitive and investment-oriented stocks find flavour with investors,” Rao added.

While the markets may have soared to new heights during the year, it has not been a great year when it comes to the common man and the decisions made by the Reserve Bank of India Governor Raghuram Rajan. 

The central bank failed to cut rates during the whole of 2014, which meant that loans still remained costly. However, some good news could be offing soon as the RBI indicated that it could cut rates soon.