100 DAYS OF MODI GOVERNMENT

It might be a mere co-incidence the day Prime Minister of India, Narendra Modi secured USD 35 billion investment in India during his first visit to Japan, Indian stock market bellwether index Nifty touched the important psychological level of 8000 followed by the S&P BSE Sensex touching 27000 for the first time ever. What this signifies is that the promise made by Modi of bringing ‘ache din’ for all will come sooner than later. On Tuesday (September 2nd) Modi led NDA government completed its 100 days. Though, the performance of the government cannot be really assessed in just 100 days, the actions and steps taken by the government is enough to understand their intention. The first 100 days of the government clearly reflects their keenness to spend the decisive mandate given by voters of India, on making good the promises made, especially in the areas of infrastructure development, urbanization and agriculture.

The Parliament has passed 12 bills (including the budget) and deliberated on several issues. Some of the important ones aimed at according more powers to the SEBI, broad basing the appointment of higher judiciary, and repealing some archaic laws. Though the Insurance Bill has been deferred, some initial progress has taken place on the labour laws front. This was achieved by more sittings, fewer interruptions and more work hours.

The government is keen on focusing the issue of governance, economy, and society. By cutting red tape and creating fl at organisational structure, government is trying to achieve operational efficiency to fix the governance issue.

Besides addressing governance issue, the government in last 100 days took various other measures to build confidence among entrepreneurs and market. Some of the major announcements done are fast track clearances for three rail lines for coal linkages, seven big ticket projects worth Rs.2,100 crore cleared and FDI in defence raised from 26 per cent to 49 per cent. Also, in addition to Railway operations and projects being allowed to receive up to 100 per cent FDI conducive tax regime for REITS (Real Estate Investment Trust) and Infrastructure Investment Trusts have been put in place.

These actions of the government have not gone unnoticed by the foreign institutional investors and even the domestic investors. In the first eight months of this calendar year, FIIs and MFs have collectively invested more than Rs.80000 crore in the Indian equity market, the highest ever in the history for the same period. To know, which are the favourite companies and sectors where these institutional investors are investing read our cover story that analyses their changing shareholding pattern since the beginning of FY14.

In addition to government actions, financial results of companies also play important role in determining the flow of smart money into equities. In our special report on quarterly results, we have sliced and dissected the overall result of India Inc for the first quarter of FY15. The topline of BSE 500 companies that account for more than 90 per cent of market capitalisation of BSE listed company increased by 10.70 per cent and the bottomline (aft er adjusting for extra ordinary income) showed an increase of 23.92 per cent on a yearly basis. After adjusting for oil marketing companies and finance companies including banks, topline growth stands at 9.54 per cent and the bottomline growth at 9.80 per cent. Apart from analysing overall performance, we have also analysed 11 sectors.