
The combined market capitalisation of BSE listed companies has surged nearly five times since the Prime Minister Narendra Modi-led BJP secured a clear majority in 2014 Lok Sabha elections. Many listed stocks surged over time while a flurry of IPO listings -- 2,076 including FY15 figures, excluding FY25's -- in the past decade, also added to size of the listed universe. This included big issues such as that of Life Insurance Corporation of India, One 97 Communications, GIC Re and SBI Card.
PM Modi assumed office on May 26, 2014 and got re-elected in 2019. He is running for the third term this time, with the election outcome scheduled for June 4. At intraday levels today, BSE commanded a market capitalisation of Rs 4,10,37,431 crore. This was up 4.81 times over Rs 85,20,817 crore m-cap the stock exchange commanded on May 26, 2014, the day PM Modi assumed office for the first time.
Kotak said an outcome where BJP wins over 325 seats and NDA in excess of 375 seats in 2024 elections would be viewed quite favorably by the market, as it would set high expectations of acceleration in economic reforms in general with continued thrust on economic liberalisation. In such a scenario, the stock market would expect major policy changes in areas such as labour and land and sectors such as agriculture, electricity, among others, in addition to administrative reforms relating bureaucracy an judiciary. Besides, the market would also expect privatisation of PSUs in such an event.
For now, Kotak does not see any major surprise and expects the BJP forming the next government with a comfortable majority. It also expects BJP government continuing with the economic policies of its previous two terms with continued thrust on economic development, growth and liberalization.
In a study earlier this month, Bernstein said structural reforms across sectors have been attempted in the past decade under PM Modi, and that efficiency of capital use - populism has given way to fiscal discipline. Subsidies have grown flat at 4 per cent versus 19 per cent in the ten years before, benefiting capex, which has shot up 6 times, it noted.
"The execution and targeting have been strong despite reduced subsidies. Despite supply shocks, geopolitical tensions and a global pandemic, prices have been well contained, with inflation not allowed to wander off to double digits like it frequently did post-GFC," it said.
Bernstein said active efforts are visible, and frequent course corrections were done to ensure visible improvement happens, adding that the push towards FDI and manufacturing has yielded some results.
It said for India as an early-stage emerging market, much is intertwined with the government's policies. To benefit from the structural drivers, it said India has a lot of catch-up with several Asian peers.
"Building infrastructure, scaling up manufacturing, building a more viable export franchise, employment, and managing inflation—the list is long. With India moving from the reform cycle to the execution cycle, continuity of power remains a crucial driver for the sustainability of the macrocycle," it said.