ETFs
Shock Modi election hits Indian ETFs
Bob Doll, CEO and CIO of Crossmark Global, discusses whether the economy is on the verge of falling into recession on Making Money.
Indian Prime Minister Narendra Modi appeared poised Tuesday to hold on to power at the head of a ruling coalition, but his Hindu nationalist party lost its absolute majority for the first time in a decade as voters defied poll predictions. another landslide.
The result unnerved investors, with Indian stocks falling sharply as emerging results showed that Modi, for the first time since coming to power in 2014, would depend on at least three disparate regional parties whose political loyalties have wavered over time. over the years.
| INDIA | ISHARES TRUST MSCI INDIA ETF | 51.48 | -3.33 | -6.08% |
| SMIN | ISHARES TRUST MSCI INDIA SMALL CAP INDEX | 72.08 | -4.69 | -6.11% |
| INDY | ISHARES TRUST INDIA 50 ETF | 49.89 | -2.94 | -5.57% |
Analysts say that could introduce some uncertainty into policymaking in the world’s most populous democracy after a decade in which Modi ruled with a firm hand.
Exchange traded funds tracking of the Indian stock market has fallen amid the political change. The iShares MSCI India ETF saw the biggest percentage decline since December 2021, when it fell 7.71%, as tracked by the Dow Jones Market Data Group.
The iShares MSCI India Small Cap ETF and the iShares India 50 ETF also traded sharply lower.
| SMIN | ISHARES TRUST MSCI INDIA SMALL CAP INDEX | 72.08 | -4.69 | -6.11% |
| INDY | ISHARES TRUST INDIA 50 ETF | 49.89 | -2.94 | -5.57% |
ETFs allow foreign investors easy access to Indian markets compared to direct investments in stocks in India, where it takes nine months for a foreign investor to open a local account, said Malcolm Dorson, head of markets strategy. emerging markets at ETF provider Global X. back in January.
WARREN BUFFETT’S FAVORITE ETFS
Modi’s Bharatiya Janata Party (BJP) won a majority on its own in 2014, ending the era of unstable coalition governments in India, and repeated the feat in 2019.
Indian Prime Minister Narendra Modi speaks at the Bhartiya Janata Party (BJP) headquarters during election results night in New Delhi, India, Tuesday, June 4, 2024. (Prakash Singh/Bloomberg via Getty Images)
Modi said people had placed their faith in the BJP-led coalition for the third time, and it was historic, in his first comments since the counting of votes began.
“The blessing of the people for the third time after 10 years boosts our morale, gives us new strength,” Modi said while applauding BJP members at the party headquarters in New Delhi.
“Our opponents, though united, could not even win as many seats as the BJP.”
Promising to work harder and make “big decisions”, Modi cited electronics, semiconductor and defense manufacturing, renewable energy and agricultural sectors as areas of particular focus during his third term , without further details.
BIDEN CONFUSES XI WITH PUTIN WHILE DEFENDING NEW TARIFFS
Indian Prime Minister Narendra Modi greets supporters at the Bhartiya Janata Party (BJP) headquarters during election results night in New Delhi, India, Tuesday, June 4, 2024. (Prakash Singh/Bloomberg via Getty Images)
Investors had welcomed the prospect of another Modi term, hoping it would bring new years of strong economic growth and business-friendly reforms, but the margin of victory emerged as a worry during the count.
Neelesh Surana, chief investment officer at Mirae Asset Mutual Fund, said the market overreacted in a sense of disbelief. “However, despite the verdict, there is likely to be an underlying continuity in government policies,” he said.
Modi, 73, who first rose to power in 2014 promising growth and change, was seeking to become only the second prime minister after Indian independence leader Jawaharlal Nehru to win three consecutive terms.
YP Rajesh, Krishn Kaushik and Nikunj Ohri of Reuters contributed to this report.