The people have decided, Narendra Modi will lead our nation for another 5 years. It’s time to look back at how markets have fared in the last 5 years. While it’s imprudent to directly correlate governments and markets, one can’t ignore the impact of policymaking on long term corporate earnings and equity inflows as well.
Benchmark indices Nifty and Sensex have gained over sixty percent and change in the last 5 years. While, Nifty Bank, Nifty IT and Nifty Midcap indices outperformed the market, Nifty PSU Bank, Nifty Infra & Nifty Metals indices fell in the last 5 years. HDFC Bank, Reliance Industries, HDFC, Infosys and ITC were the top gainers under the Modi govt, while Dr. Reddy's, Tata Steel, HeroMoto and Bharti Airtel were the worst performers.
Here are a few interesting facts about how markets have performed during previous elections:
SENSEX SCALES NEW PEAK
Sensex has gained 62 percent and change in the last 5 years with a 5-year compound annual growth rate of 25.2 percent. However, under the UPA I and UPA II government, the index gave returns of 207 percent and 66 percent, respectively.
MARKET UNDER MODI
Benchmark indices Nifty and Sensex have gained over sixty percent and change in the last 5 years.
MARKET UNDER MODI: SECTORS
While the Nifty Bank, Nifty IT and Nifty Midcap Index Outperformed the frontline Index, Nifty PSU Bank, Nifty Infra & Nifty Metals Index underperformed
THE HEAVYWEIGHT GAINERS
Heavyweights Reliance, HDFC Bank, HDFC Ltd, Infosys and ITC constitute around 40 percent of the Nifty, 3 among these 5 more than doubled in the last 5 years.
Dr Reddy's, Tata Steel, HeroMoto and Bharti Airtel were the worst performers under the Modi government.
KEY NIFTY INCLUSIONS
Some multibaggers like – Bajaj Finance, Bajaj Finserve, Britannia, Titan and UPL made their way into the Nifty over the last 5 years.
KEY NIFTY EXCLUSIONS
Stocks like BHEL, PNB, Tata Power, NMDC, JSPL have lost anywhere between a quarter to half of their market caps and were excluded from the Nifty.
WHERE ARE THE EARNINGS?
However, the one thing that still eludes us is EPS Growth. While the index has compounded at 10.5 percent over the last 5 years, Nifty earnings have grown at just 3.5 percent.