5 reasons why stock markets think Modi is good for them

Narendra Modi's elevation as BJP’s candidate for prime minister’s post was officially announced post market hours on Friday. However, by noon it was already clear that his name would be announced by evening.

Some expected the market to react to the event but it did not. And it is unlikely that it will, for the simple reason that he is not the prime minister, yet. Having said that, many in the markets and Corporate India world prefer to see him over anyone else as the next prime minister of the country.

We look at some of the reasons quoted by the market and why it senses a bullish undertone in Modi’s candidature announcement.

A survey carried out by ET CEOs Confidence before Modi’s candidature was announced suggested that an overwhelming three-fourths of the 100 CEO’s surveyed prefer Modi as the next prime minister.

Rahul Gandhi bagged to get votes of only seven CEOs.

Corporate India has been at the receiving end of ‘policy paralysis’. The report says CEOs have voted for a strong leadership, intent, decision and action, which Modi has demonstrated in Gujarat. Rahul Gandhi has no such claims to his name.

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In a closed door meeting with 120 CEOs in Mumbai a few months back, Modi told his audience what they wanted to hear. He said that what India needs is empowered states (read decentralised power), flexible labour laws and a governance backed development agenda.
 
Giving a feel of what the market wants and one that can bring in the next market rally , Manish Sonthalia, VP Fund Manager of Motilal Oswal Asset Management  in a TV interview with said that markets want Narendra Modi as the next Prime Minister.

The interview was taken before Modi’s candidature was announced and markets had not recovered the way it did in the previous week.

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Even foreign broking houses have turned vocal on the preferences. CLSA, which advices some of the biggest foreign investors who put in their money in the country said that Indian stock market’s greatest hope is the emergence of Narendra Modi as BJP’s prime ministerial candidate.

Christopher Wood, author of the report said that as the sense of crisis gets worse, the better Modi’s chance of winning.
 
Arun Kejriwal director KRIS is quoted in a Times of India report saying that there are three reasons why Dalal Street wants Modi to become the PM. First he has been able to instill faith among people about his ability to lead with speed.

Second, people believe that he can give us a clean administration with the ability to implement plans. And third they believe in the Modi’s vision.

An unknown FII source in the same report sums it well saying that FIIs think Modi is business friendly, brings clarity to the table and has a track record to back it. Investors love such people.