Indian stocks are recovering from losses caused by Modi’s election upset. The NSE Nifty 50 Index rose by up to 2%, continuing a weekly gain of nearly 3.3%. This followed the Reserve Bank of India’s decision to keep the benchmark interest rate at 6.5% and raise the growth forecast for the fiscal year ending March 2025 from 7% to 7.2%.
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Despite the BJP losing its majority and forming a coalition government, which raised concerns about fiscal populism, the RBI’s optimistic growth projection provided a positive surprise. Shrey Jain, CEO of SAS Online, suggests investors focus on the new government’s details and expect a pro-growth budget.
The stock market has bounced back after Tuesday’s selloff, which wiped out almost $400 billion in value when Prime Minister Modi secured support from two key allies to form a government. However, shares of state-run enterprises have lagged, with their sector index dropping over 3% this week.
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