One place Trump beats Modi soundly!

Here is how we well the Indian stock market performed versus the US stock market in the last 12 months

NIFTY India: Minus 24%

Dow Jones USA: Minus 1%

The fact that a country which is 7 times richer can deliver these kinds of stock market returns versus a ‘fast growing economy’ is really stunning.

Since Trump was sworn in as President in January 2017, the US economy has been doing well with rapid Job creation and growth. Trump through a combination of Tax cuts and robust trade policy has pushed the economy to a different level outperforming the equally large European economy by a wide margin. But it is on the stock markets where the performance has really stood out.

In the 36 months before Trump Took Over, the Dow Jones (New York Stock Exchange) went up 22%. In the 40 months since then, the market is up 26%. This is despite the market crashing since COVID.

Modi started with magic as well but lost his way

Modi started off with magic as well. In the first 3 years after he became PM, the market went up 31%. In reality, once can say it is even higher because since September 2013 when his PM candidature was announced, the markets actually went up a massive 72% until May 2017. This is visible in the real economy as well. Between 2014 and 2017, per capita on constant basis went up 21%. This is much higher than the last 3 years of UPA rule.

But the similarity with Trump ends there. Since Demonetisation (also when Trump was elected President), both the economy and the stock market have been struggling. Since November 2016 (Demonetisation), the NIFTY is up 6%. The US Stock market is up 36% since then. India’s per capita GDP since March 2017 is up 16% in 3 years. Much lower than the 21% in the 3 years before that..

In sum, While no doubt that real incomes had gone up much faster since the PM took over, the growth has really tapered over since 2017 after Demonetisation and GST. This has reflected in the stock markets that did quite well initially. One can now hypothesise that the PM gained a lot from the crash in oil prices, the benefit of which started to run out over time.

Yesterday CRISIL released a report saying India will face its worse recession since independence and growth levels are unlikely to recover to pre-COVID levels before 2022-23. The PM’s recovery plan hardly saw a response from the stock market and with no end in sight of the COVID-19 crisis, the Modi economy strategy seems to be in tatters.