India’s Modi Passes 100-Day Stocks Test: Chart of the Day

Indian Prime Minister Narendra Modi is getting an above-average grade from stock investors after his first 100 days in office.

The CHART OF THE DAY shows the nation’s S&P BSE Sensex index has climbed 9.3 percent to a record since Modi was sworn in on May 26, after winning the nation’s biggest election victory in three decades. That compares with the 2.2 percent average gain in the first 100 days of nine previous leaders tracked by Bloomberg since 1980. The Sensex has surged 37 percent since Modi secured his Bharatiya Janata Party’s nomination last September.

Modi, 63, has so far taken steps to cut bureaucracy, speed up project approvals and cut income taxes after luring voters with pledges to revive the expansion in Asia’s third-largest economy. While skeptics say Modi isn’t doing enough after he blocked a global trade deal and failed to pass measures to open up the insurance industry to foreign investors, DSP BlackRock Investment Managers Pvt. says the rally in stocks will extend as his policies lead to faster earnings growth.

“Investors are taking a medium- to long-term view,” said S. Naganath, Mumbai-based chief investment officer at DSP BlackRock, which manages $7.6 billion. “The fundamentals will follow.”

Profit of Sensex companies will climb 20 percent annually in the next three years as business confidence and capital spending increases, he said. Indian shares may return about 18 percent annually over the next four years, in line with profits, said Mahesh Patil, the co-chief investment officer at Birla Sun Life Asset Management Co., which oversees $16.3 billion. India’s economy expanded at the fastest pace in more than two years in the three months through June.

P. V. Narasimha Rao, known for opening up India to overseas investors, had the biggest Sensex rally during his first 100 days, a gain of 40 percent in 1991. The gauge rose 3 percent after Manmohan Singh first took office in 2004, and climbed 16 percent in the 100 days after he won a second term in May 2009. Chandra Shekhar oversaw the biggest drop, 20 percent, when he took power in 1990.

Modi, the son of a tea seller, is favored by investors because of his record in Gujarat. The western Indian state he led as chief minister since 2001 has attracted investments by companies including Ford Motor Co., while its per capital income nearly quadrupled during his tenure to 61,220 rupees ($1,010), faster than the national average.

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