There’s a reason why the Indian stock market seems to love the BJP

livemint.com:

Sensex closed at 73,917 points, or 1.6% lower than the highest level since April, when the election started coming into focus. Now, the thing to remember is that the parts can behave differently from the whole. And that seems to be happening with the stock market as well.

At a simple level, investors in the stock market can be divided into two broad categories: foreign institutional investors (FIIs) and domestic institutional investors (DIIs). Since April, FIIs have net sold stocks worth ₹369.1 billion, or around $4.4 billion. In the same period, DIIs have on a net basis bought stocks worth ₹781.6 billion.

Further, DIIs have net bought stocks worth ₹339.7 billion just in May. DIIs are institutions like insurance companies, mutual funds, provident funds, banks, etc, which primarily invest the money they collect from retail investors. Further, investments made by DIIs include money coming in through systematic investment plans of equity mutual funds and investments made in government investment schemes like the Employees’ Provident Fund and National Pension System.

So, on the whole, Indian retail investors seem confident that the current dispensation will continue after 4 June, when the Lok Sabha election results will be declared. Also, FIIs on the whole seem to have a very small doubt about whether the BJP-led National Democratic Alliance (NDA) will get the same confident mandate it got in 2019, and hence, have been net sellers. FIIs owned Indian stocks worth around $794 billion as of April end.