By Sanjeev Sharma
Finance Minister Nirmala Sitharaman has been presiding over Indian stock markets’ biggest bull run in the last few months. Prime Minister Narendra Modi and Sitharaman are scripting what is easily the biggest wealth creation story in many years.
Sitharaman is a first time Finance Minister and just a year and a half into the job. Under her watch, India has seen the most tearing stock market frenzy since March of 2020 and one of the biggest wealth creation journeys for investors, domestic and foreign.
With the economy taking a hit due to the Covid 19 pandemic, it is the unstoppable run in the stock markets which has made hundreds of thousands of new investors flock to it in Covid times.
Investors opened 3.4 million new demat accounts in the September quarter, as per data by the Securities and Exchange Board of India (SEBI).
While global factors like easy liquidity and central bank bailouts have certainly played a role it cannot be denied that the economy and markets are under the Finance Ministry’s watch.
The markets are unstoppable breaching new records every passing day and foreign inflows are a deluge.
Is Sitharaman India’s most underrated Finance Minister and the best Finance Minister for the stock markets?
Not much credit has flowed North Block’s way for the market’s stupendous rally. The stock market is clearly buying the economic recovery story and India’s growth prospects as foreign institutional investors (FIIs) have made one of the largest bets in emerging markets in India.
For a newcomer to the Finance Minister’s job, Sitharaman in 2020 has a scorching record of equity markets highs which many of her illustrious predecessors in NDA and UPA governments have found elusive.
Foreign inflows into the Indian stock markets are not showing any signs of easing even during the holiday season of the month of December with inflows of more than $7.5 billion.
Over the past few years, December is seen as a month where foreign funds are not so active due to the holiday season internationally. November is usually a month where foreign funds press profits. Both of these have not happened this year.
Equity markets have had a historic run in 2020. The markets hit all time high of Nifty at 12,431 in January 2020 also under Sitharaman’s watch. Towards, the end of the year, the markets again surpassed its lifetime highs.
FII inflows saw strong momentum in November with best ever monthly inflow of Rs 65,200 crore and this has continued in December too. For the full year, FIIs inflow stood at Rs 1,10,000 crore. The BSE Sensex is past 47,000 points and only moving up.
According to Vinit Bolinjkar , Head of Research, Ventura Securities the NSE market cap has raced at an astonishing pace of wealth creation. There has been an absolute growth of 75.3 per cent between March end and December.
He added that India’s post-pandemic measures have, hands down, delivered the highest return per unit of stimulus. This ensured that scarce resources were not withered away and that India will not face the repercussions of runaway inflation that the world is destined for. With one of the lowest corporate tax rates in Asia (for new corporates), India is a favoured destination for global funds, he added.
Shibani Sircar Kurian, EVP and Head of Equity Research, Kotak Mutual Fund said on a net basis, FIIs have been buyers in Indian equities during the month of December to the tune of $7.5 billion even after lifetime high flows witnessed in November 2020.
Calendar year to date, FIIs have been net buyers in India to the tune of $22 billion which has been amongst the highest in the region, Kurian said.
“The Indian economy is slowly but steadily getting back on track. Further, unlike the situation in the developed countries, the trends in the spread of the COVID virus in India continues to improve with lower daily additions and improvement in the recovery rates despite winter setting in and the festival season which recently concluded,” Kurian said.
(Sanjeev Sharma can be reached at [email protected])
