MODI A TRUMP CARD FOR THE

MARKETS
MEMBERS:
Priyanka
Hitesh
Tarun
Rahul
Romit
Bagchi
Divya
AGENDA
Objective
Hypothesis
Current Scenario
Qualitative Analysis
Quantitative Analysis
Key Findings
Conclusion

Objective
The objective of the report is to determine whether Modis selection
as Prime Minister could prove to be a boon for the stock markets.

Hypothesis
Modi a trump card for the stock markets.
INTRODUCTION
A stock market or equity market is the aggregation of buyers
and sellers of stocks.
Indian Stock exchanges
Bombay Stock Exchange
National Stock Exchange of India
Calcutta Stock Exchange

Factors which affect Stock Market
Supply and demand in
the market
30%
World stock market:
after globalization the
stock market of one
country is affected
majorly by the other
markets around the
world
20%
Market reaction to
company news. News
like dividend announced
has a positive affect on
stocks.
15%
Company growth
over the quarter.
Usually it is noticed
that when company
makes profit during
a quarter the market
responds positively
7%
Economy as a
whole. The
current growth
structure in
the nation
also plays a
crucial role in
stock market
10%
Natural &
unnatural
disasters: like
terrorist
attack,
tsunami, etc
8% 15%
Investor Sentiments
THE HISTORIC VARIATIONS IN STOCK
PRICES WITH CHANGING POLITICAL
SCENARIO OF INDIA.
There has always been a strong connection between politics
and the performance of the equity markets.
Economic policies guides the economy.
And this in turn drives the performance of the corporate.
The performance of the corporate world decides how their share prices will move.
This is why investors, both domestic and foreign, have
been keenly eyeing the developments related to the 2014
general elections in the country.
Interestingly the corporate world and therefore the stock
markets appear to be rooting actively for Gujarat Chief Minister,
Narendra Modi.


Modi has always been pro-business, which is what counts in the stock
market.
Boom years of 2003-07- the discovery of India by foreign investors led to a
euphoric rise in the market.
The markets and foreign investors are terribly important for the economy.
Earning the trust of investors, both domestic and foreign, is absolutely
critical.
Increasing foreign investments allowed companies to raise money
cheaply, which allowed them to expand capacity and the result was a virtuous
circle of growth and wealth and job creation.

CURRENT SCENARIO
Scenario post state elections

Sensex surged over 439 points in the opening trade on heavy fund inflows amidst exit polls forecasting
good show by the BJP in state assembly elections.
The sensex resumed higher at 20,992.25 and crossed 21K level immediately, showing a sharp gain of
369.45 points or 1.78 per cent from its last close.
The Sensex hit an all time high post the December 2013 elections.

Scenario now

With stock markets expecting a change in governance and a sudden aversion to coalition politics
markets are showing a strong upswing .
Foreign investors have poured in about $18 billion in the Indian stock markets this year. They bought
net $1.1 billion of stocks in January


QUALITATIVE ANALYSIS
Target For Qualitative Analysis
Surveys were conducted of the people who invested/investing in
stock markets as well as to those who do not invest but have an idea
of the same.
The respondents included people from the industry, employees,
students
This enabled us to get an overview of how people belonging to
different fields perceive the given topic.
FLOW OF QUESTIONS
Do you invest in Stock Markets?
Opinion on stock market?
Current party power and their impact over the years?
Influence of elections on stock market?
How they view Modi as our prime minister in 2014?
How will he impact the stock market and promote foreign investments?
Policies which they think will help to revive market?
Many more question related to Modi and other parties & how they impact stock market?
Conclusion Of Qualitative Analysis
On the whole, all the interviewees believed that there will be a
positive impact on the stock markets if Modi comes into power.
However, there was ambiguity in whether this situation would
last for a long time.
But they were sure that at least for a short period of time the
stock prices would show a positive growth in case he wins the
2014 elections.

QUANTITATIVE ANALYSIS
SAMPLING TECHNIQUE
DEMOGRAPHICS
18-30
56%
30-40
20%
40-50
9%
50+
15%
Age Group
56
12
23
9
0
10
20
30
40
50
60
Voted Never Voted
Men 68 Women 32
0
5
10
15
20
25
30
35
47 18 25 10
North South West East
Males 32 12 17 7
Females 15 6 8 3
Geographic Division
KEY FINDINGS
If the Lok Sabha elections were to be held tomorrow
which party would you vote for?

Party Male Female Votes
Congress 18 9 27
BJP 30 15 45
AAP 15 8 23
Others 2 3 5
0
10
20
30
40
50
60
70
80
90
100
Congress BJP AAP Others
Votes
Female
Male
ANALYSIS:

BJP is the clear leader in terms of votes (from
our sample data)
Prime ministerial nominee; Narendra Modi
had widened his lead over Congress vice-
president Rahul Gandhi as the preferred
choice for PM.
AAP and Congress have a stiff competition
Congress
27%
BJP
45%
AAP
23%
Others
5%
VOTES
Opinion on the performance of the Congress-led UPA government at the
Centre over the last 4 years
Level No. of People
Fully Satisfied 3
Somewhat Satisfied 23
Somewhat Dissatisfied 38
Fully Dissatisfied 36
Majority of the people fall under the
category of somewhat dissatisfied or fully
dissatisfied.

Theres a major discontent amongst the
people related to the way Congress has
led the government in the last 4years.

According to a recent online study, BJP
leads Congress in terms of GDP,
Agricultural growth, factory growth,
education provision etc.
Rahul Gandhis face off with Arnab Goswami?
68% respondents agreed that their opinion changed after the interview
Respondents concluded that existentialism is not the way out
Respondents stated that a candidate who pushes the blame and takes the
credit is not the right person to take the PM position
Dodging questions doesnt really help
However the remaining 32% had a fixed opinion on the PM candidate
CROSS-TABS ANALYSIS
age * q7 Cross tabulation
Count

q7
Total yes no
age 18-30
51 5 56
30-40
19 2 21
40-50
13 2 15
50+
5 3 8
Total
88 12 100
Do you invest in stock
market?
Yes
No
Interpretation-
51 out of 100 people in age group 18-30 invest in stock market.
19 people in age group 30-40 invest in stock market
40-50 age group: 13 and 50+ has 5 people who invest in stock market.

CROSS-TABS ANALYSIS
Do think there is a connection between
politics and equity market?

Strongly Agree
Agree
Disagree
Strongly Disagree

age * q9 Cross tabulation
Count

q9
Total 1.00 2.00 3.00 4.00
age 18-30
35 16 3 2 56
30-40
12 7 1 1 21
40-50
10 2 2 1 15
50+
7 0 1 0 8
Total
64 25 7 4 100
35 % of the total respondants in the 18-30 age group believe there is strong connection
between politics and stock market movement.
16% agree
12% and 7% in age group 30-40 strongly agree and agree respectively.


ANALYSIS
Majority of the people who invest in stock market also agree that
there is a strong connection between politics and stock market
movements.
Inference- the investing decisions of people are affected by
political scenario in our country.
Political scenario is an important factor but not the sole one
based on which investment decisions are made.

Which sort of Government do you prefer?

68
32
0
10
20
30
40
50
60
70
80
Single Party Coalition


68% of the respondents are
in favour of a single party
which shows that people are
in favor of a single party
governance over coalition.
COMPARE THE PARTIES
21%
42%
37%
Good Governance/ administration and curbing
corruption
Congress BJP others
The voters were of the opinion
that since curbing corruption is
not something that the
Congress has excelled at, the
BJP or the AAP could do a
better job at resisting
corruption.
50%
35%
15%
Religious harmony
Congress BJP others
The BJP has so far been
associated with Hindutva
extremism and also been called
the Saffron Party

In terms of religious harmony,
Congress could get the trump
card since they have so far
maintained an image of being
pro-secular.
20%
60%
20%
Handling Economic Crisis
Congress BJP others
Voters and investors alike are of the
opinion that Modis alliance with major
corporate houses and policy to give
tax sops to the industrialists could
boost the investment climate and the
grim IIP index (Index of Industrial
Production)
35%
40%
25%
Countering Terrorism
Congress BJP others
The voters have not taken a firm stance
in so far as terrorism is concerned,
since the Congress has failed to curb
terrorism (Mumbai blasts, entry of
terrorists via unguarded ocean
territories).
The BJP is also associated with saffron
terrorism and has the image of being
anti-Muslim.
We are yet to see what AAP has in
store for us in so far as containing
terrorist attacks are concerned.
Rate Modis governance in Gujarat on the following
factors:
1
3
5
0
10
20
30
40
50
60
1
2
3
4
5
On a scale of 1-5
42% have rated 3 for his governance as investor
friendly.
52% have rated 4 on encouraging FIIs front.
40% have rated 5 for industrial relations
48% have rated 5 for the economic growth of the
state.
53% have rated 5 for the overall performance

On the whole, maximum
respondents are happy with the
governance of Mr.Modi in
Gujarat.


age * q15 Cross tabulation

Count

q15
Total

yes no don't know
age 18-30
34 20 2 56

30-40
13 6 2 21

40-50
11 4 0 15

50+
7 0 1 8

Total
65 30 5 100

CROSS-TABS ANALYSIS
Do you think Modi will be able to
implement his Gujarats
performance across pan India?

Yes
No
Dont Know
34% of people in age group 18-30 believe Modi can replicate the success
story of Gujarat in India.
20% in the same age group replied they do not believe in Modi to bring
change in India.
What do you think is the reason
for the current Bull Run in the
market?

BJPs 4-0 win
Policies by the RBI governor
Others (please specify)


age * q16 Cross-tabulation

Count

q16
Total

BJP'S 4-0
WIN
Policies by
RBI
governor others
age 18-30
41 11 4 56

30-40
13 7 1 21

40-50
10 5 0 15

50+
5 3 0 8

Total
69 26 5 100

41 people in the age group 18-30,
13 from 30-40,
10 from 40-50 and
5 from 50+ age group, feel BJPs win has resulted in spike of indices.
Majority of people who invest in stock market believe Modi can bring about
change in Indian economy
q7 * q15 Cross tabulation
Count

q15
Total no yes dnt
q7 no
6 5 0 11
yes
3 85 1 89
Total
9 90 1 100
CROSS-TABULATION(Invest in stock market & who
believe that Modi can bring about a change in Indian
Economy.)
ANALYSIS
Majority of respondents who invest in stock market also
believes that the economic policies of NaMo can lead to
economic growth.
The sentiment is shared by foreign investors by pumping about
Rs80bn ($1.3bn) into Indian equity markets.
Correlation Between No. Of People Investing In The Stock Market & The
People Who Believe That Modi Will Be Good For The Markets
Correlation is 0.368.
Correlations
q7 q15
Spearman's rho q7 Correlation
Coefficient
1.000 .368
**

Sig. (1-tailed)
.000
N 100 100
q15 Correlation
Coefficient
.368
**
1.000
Sig. (1-tailed)
.000
N 100 100
**. Correlation is significant at the 0.01 level (1-tailed).
ANALYSIS
As the number of people who believes that Modi can
spearhead economic growth increases, then more people will
invest in the market.



Good Politics will drive Good Economics.
Despite depressing industrial
output growth,
A stagnant GDP,
Double-digit inflation,
And a slippery fiscal situation
A change in the political
dispensation will be enough to
drive stock prices.

A change in government, preferably led by a large national party like BJP, would
be welcomed by markets as it would be a fresh mandate and hopefully a fresh
perspective on policy making

According to our survey following are the factors that prove our hypothesis to be
right:
BJP was highest voted to handle economic crisis.
There is faith in Modis performance of economic governance in Gujarat.
Modi has a positive effect on FIIs.
Conclusion