Extremely good year for India’s stock markets

After India’s surprisingly strong growth figures for the past quarter, the rating agency Moody’s raised its growth projection for the fiscal year that starts in April from 6.6% to 8%. Especially domestic consumption and investments are expected to push growth. Speaking of the fiscal year. The past budget year (April 2023 to March 204) was one of the best ever for the Indian stock exchanges and the strongest in 20 years. The big blue chips rose by around 28%. But the stars were the medium-sized and small companies with spectacular gains of around 60% and 70% for the corresponding equity indices, respectively. Utilities (plus 86%), infrastructure companies (plus 77%), and automobile companies (plus 74%) rose particularly significantly.

Government bonds soon to be included in major bond indices

Indian government bonds posted much more moderate but still positive performance in this period with a gain of 3.5% for ten-year issues. Starting in June, Indian government bonds will be added to the most important global bond index for EM local-currency bonds. Their weighting in the JP Morgan GBI-EM Global Core Index will then gradually be increased from 1% to the upper limit of 10%. This will presumably gain scores of new investors for Indian government bonds and generally reduce the Indian government’s financing costs.

The mother of all parliamentary elections starting

The parliamentary elections are starting in the most populous country on earth, and it is a gargantuan undertaking, as always. The votes will be cast in seven phases over a period of six weeks. The results are to be announced on 4 June. Most expect a fairly clear victory for the ruling Hindu-nationalist BJP under Prime Minister Modi. Many opposition candidates complained of massive interference in their campaigns by government officials.

Opposition calling out election interference

The largest opposition party, the Indian National Congress, complained that bank accounts had been blocked, which is severely impeding the campaign. Opposition candidates were suddenly confronted with allegations of corruption or other criminal acts in dozens of cases, and were taken into police custody in some instances – including a number of very well-known and long-serving politicians. This may be justified in some cases, but the charges may also be trumped up in others. At the same time, claims of election interference are often made before an election to prepare for a likely defeat.

Development with good and bad sides

In principle, this is nothing new for internal Indian politics, and was common practice for other ruling parties before the BJP. But it seems to be more extensive this time. The central BJP government refutes the allegations, stating that the corresponding authorities are acting absolutely independently. Doubts are justified, but at the same time, the BJP has no real need to engage in large-scale election manipulation. Modi is very popular. Many voters feel that he has improved their personal financial situation and has improved the economy, and has been successful against corruption.