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Prime Minister Narendra Modi expressed confidence that the BJP-led National Democratic Alliance (NDA) government will secure a strong majority in a third term and predicted that the stock market would rise significantly depending on the election results.
“Market participants will be exhausted within a week after June 4, when the election results will be announced,” Prime Minister Modi said in an interview with NDTV, hinting that the markets would hit record highs.
“We started our journey at 25,000 (Sensex) and reached 75,000. This increases our pride in the world. If more regular people come into the market, the economy will become much stronger. I hope that the risk-taking capacity of citizens will improve,” Modi said.
Citing the rally in PSU stocks as an example, he said let's look at Hindustan Aeronautics (HAL), which is showing a 'great rally' with its stock hitting an all-time high with huge profits.
Benchmark indices BSE Sensex and NSE Nifty 50 have been volatile recently. Nifty fell more than 4% to 21,821 after hitting an all-time high of 22,794.7 in early May. It has since recovered to 22,500.
Market analysts say concerns about the election outcome are causing significant volatility. India's VIX, a measure of market volatility, has more than doubled from its recent lows to over 20 in just three weeks. Historically, the VIX rose as high as 29 ahead of the election, indicating increased market sensitivity.
Modi's assurances aim to bolster investor confidence, but experts warn volatility could persist until the general election results are announced.
Modi's assertion on markets follows similar assurances made by three senior cabinet ministers on market stability. Addressing the rally last week, Modi praised the growth of stock markets over the past decade, highlighting the significant rise in small investors and noting India's status as the fourth-largest stock market with growing global investor confidence. Union Home Minister Amit Shah and External Affairs Minister S. Jaishankar also cited market concerns, attributing the recent turmoil to election unrest and predicting a post-election rebound. Prime Minister Shah emphasized that market declines were more severe in the past and encouraged investors to buy stocks in anticipation of a surge after June 4.