What's the matter with India's new high stock market? How did India's stock market hit a new high? On Thursday (May 23), modi's re-election as India's prime minister was a foregone conclusion, which will start his next five-year term. Boosted by this, India's stock market rose sharply to a record high, and the price of Indian rupee and national debt also rose.
Modi's ruling coalition wins historic election
On the afternoon of May 23, Beijing time, preliminary statistics show that Indian Prime Minister modi will be given a second term.
India's New Delhi TV station reported live on May 23 that, according to the results of the general election, by 15:25 Beijing time, the BJP led by Indian Prime Minister Narendra modi won 342 of the 542 seats in India's parliament, a landslide victory.
Although it needs to be confirmed by the election committee, according to the current vote statistics, modi's re-election as prime minister is a foregone conclusion. Swaraj, India's foreign minister and senior leader of the BJP, also said on twitter that the BJP has won a 'great victory'.
Modi's party won an absolute majority of votes, which will also enable modi to continue to push forward reforms to solve the unemployment and rural poverty problems that have existed in his five years in power.
Modi faced pressure at the beginning of the election campaign. He lost many local elections in December last year due to rising public anger over agricultural prices and unemployment. However, analysts say that in February, a suicide car bomb killed 40 Indian police officers in the disputed Kashmir region, which benefited the right-wing BJP. Since then, the focus of the campaign has shifted to the confrontation between India and Pakistan.
The vote in India's general election began on April 11 and lasted 39 days. According to the election schedule, the 23rd is the date of the general election. The counting starts at 8 am local time and is expected to end later on Thursday.
There were 900 million registered voters in this election, an increase of 84.3 million over the 2014 general election. It has been reported that this year's election in India is expected to cost US $7 billion, which is regarded as the largest and most expensive election in the world.
Indian stock market broke through 40000 points
R Sivakumar, head of fixed income at axismutual fund, said: 'political stability and continuity are an important factor for global investors, which will make India the focus of global equity investors. '
With the victory of the BJP, Indian stocks, bonds and foreign exchange markets rose together.
India's stock market soared to a record high. India's Sensex index in Mumbai hit an all-time high of 40124.96, then fell back. At the close, it was down 0.7%.
India's NSE nifty index rose 0.5% to 11796.5, reaching a high of 12000 for the first time in the day. The Indian Rupee rose 0.4% to 69.75 against the U.S. dollar in early trading, while the Indian Rupee rose 0.3% to 69.45 against the U.S. dollar. The yield on 10-year Indian government bonds fell 6 basis points to 7.2%, the lowest level since April last year.
Since the start of the election season, India's stock market has soared to new highs.
In the morning of April 18, India's Sensex index soared to 39420 points, a new high. Only two days ago, the Sensex index just hit a record high of 39275.64. In early April, the Sensex index broke through the 39000 mark for the first time. Meanwhile, India's nifty 50 index also rose to a record high of 11856.15, surpassing the previous record high of about 11810 points.
On May 20, an export poll released after India's general election showed that the ruling party, the National Democratic Alliance led by the BJP, won, which means that the current Prime Minister modi is expected to be re elected.
Affected by the news, Indian stocks and foreign exchange rose, and the Sensex index of Bombay Stock Exchange rose by 3.75%, the biggest one-day gain ever, to a record high of 39352 points. At one point, the NSE nifty 50 Index surged 2.5%, its biggest gain since October 12. The Indian Rupee rose to 69.63 rupees against the U.S. dollar from 70.22 rupees at the close on the 17th.
How does the election affect India's market performance?
India's stock market soared by 400% in the past 10 years, which made many people smack their tongue.
From April 30, 2004 to April 30, 2019, the MSCI India index achieved a total return of 623%, exceeding 308% of the CSI 300 index, 209% of the MSCI global index and 263% of the S & P 500 index.
TEDA Manulife Fund said that in 2014, that is, in the last election, modi's Bharatiya Janata Party (BJP) won 282 seats out of 545 seats, and in 2014, the party only ran for 427 seats. This is the first time in 30 years that a political party can win more than half of the seats in the house of people, which means that the Indian people's party can form a cabinet independently. Looking back on the amazing mobilization ability and reform achievements of the modi government in various fields in the past five years, it has something to do with their strong position in the house of people.
The figure below summarizes the trend of India's capital market before and after the election in 2014, which is reflected in two stages: the rising of the expected winning rate of the people's party in the market and the completion of the election after May.
According to TEDA Manulife fund, if we further review the seven general elections since 1991, the medium and long-term return of MSCI India index has risen five times after the announcement of the general election results, with an average return of 6.77% in three months, 12.26% in six months and 24.28% in 12 months. This shows that with the announcement of the election results, the political situation in India is gradually clear and stable, and investors' expectations for economic growth will drive the market. Therefore, the early stage of the election usually provides a better entry time.
Foreign funds bought $9.5 billion in Indian shares this year
In a recent research report, ANZ pointed out that the inflow of foreign capital into the Indian market reached a record high, reaching US $6.1 billion in March. Khoon Goh, head of Asia Research at the bank, said: 'in addition to expecting policy continuity after the election, foreign investors also expect the Central Bank of India to cut interest rates further to boost economic activity. '
Previously, the Central Bank of India completed its second interest rate cut this year in April. The next rate cut is expected in June or August. India's stock market has also been helped by a more dovish Federal Reserve and China's recent economic policies.
The optimism that modi will push for reform in his second term may attract more foreign capital into India, according to a report by the company. India is already Asia's largest overseas cash destination this year.
'foreign investors have been preparing for modi's victory. David Cornell, chief investment officer of ocean dial asset management in London, said: 'given the size of India's economy and the opportunities it offers, India is seriously underinvested. There are signs that modi will use his re-election to support his reform agenda, which will trigger more capital inflows. '
In 2019, foreign funds bought $9.5 billion in Indian stocks, second only to China, while rupee bonds flowed $447 million. Two QDII funds have been set up in the Indian stock market, namely, UBS QDII and HTC QDII. In addition to the QDII specifically invested in India, there are also several BRICs QDII, some of which are also invested in India, such as the BRICs South Fund.
The Indian market has certain restrictions on overseas investors. To invest in the Indian market, domestic investors can also choose Hong Kong as a springboard. Hong Kong has some fund products in the Indian market, and some securities companies can have channels to invest in the Indian market.
"If this trend continues, everyone should be happy to see a stable government because the economy needs stability," said susant Kumar, equity fund manager at raay global investments PVT., Mumbai. '