Emerging-market bulls tout Modi Premium as election nears
Prime Minister Narendra Modi, India’s stocks have commanded an unprecedented premium to emerging-market peers. As he seeks a third successive term, investors are betting that the performance can continue.
Modi is likely to spend heavily on manufacturing and infrastructure should he win, continuing a strategy that wooed money managers during his decade in power. The stock market has rallied to successive records, while India’s imminent inclusion in a major global bond index is expected to lure billions of dollars in inflows.
A “pro-growth, pro-market agenda” is being endorsed by the electorate, said Andrei Stetsenko, a New York-based portfolio manager of Farley Capital. “To a much greater degree than a decade ago, the company managements with whom I meet feel the government is on their side.”
Modi’s 10 years in office have ensured political stability and policy continuity, helping reduce extreme swings in asset prices and turning India into a preferred investment destination for global funds. The election will start, in phases, on April 19.
When votes are counted on June 4, it will all boil down to whether or not Modi’s party wins a clear majority in the legislature. He has predicted a tally of more than 400 seats for his Bharatiya Janata Party and allies, though it remains to be seen whether the electorate’s top concerns over lack of jobs and high inflation, as highlighted by a recent poll, weigh on his popularity.
In 2019, the alliance led by the BJP won more than 350 of the 543 seats in the lower house of
