The Modi Index: Segments That Beat The Sensex

modi-arun-pti-LWith the Union Budget of 2015 approaching release, the stock markets have already begun to rise in anticipation, as have critical eyebrows among those who wonder whether this government truly means business.

HDFC”s Deepak Parekh, a much respected voice among business leaders, has said that little has improved in terms of the “ease of doing business” since the Modi government started its tenure, in an interview with PTI.

While the market performance so far has shown tremendous growth, he feels it was driven by an optimism that has as of yet remained unpaid.

While speculation on the budget is rife, and business media is the place to go when it comes to reading into the evolving situation, a study done by Capital Mind caught my attention.

Using data collected from Modi’s speech at the BJP national council meet in Delhi on January 19, 2014, they identified the sectors he liked – power, railways, capital goods and tourism – and created a model index of companies in each. These include some that are alleged to have links with the Modi administration. The full article is available here http://goo.gl/7osB2f

This ‘Modi index’, when compared to the BSE Sensex (India’s 30 top stocks) outperforms it by up to 67 percent.

Now while banking on this Modi model brings its own caveats – namely that the list was drawn up in hindsight, there certainly seem to be benefits to playing the market on Modi’s supposed terms.

This may seem too headline grabbing to be true, and indeed it could well be. We invite your comments on this Modi index, and whether you think these numbers paint the right picture.

Varun Ramesh

Image Source: The Viewspaper