Reforms galore, index annual returns in line with the long-term trend

The benchmark Sensex had risen 159 per cent since May 15, 2014, a day before the 2014 election results were announced. Only the NASDAQ composite, which rose 207 per cent among major equity benchmarks, has bettered Sensex's performance. However, in terms of annual returns, it is 11.14 per cent, in line with the long-term annualized returns for equities as an asset class.

The returns are also below the previous Manmohan Singh-led United Progressive Alliance (UPA) government. During the ten years of UPA, the Sensex had jumped nearly four times. Analysts said the returns are impressive, considering there was heightened volatility due to big policy decisions like demonetization, implementation of goods and services tax (GST) and new bankruptcy law. And global disruption due to the onslaught of the COVID pandemic and the resultant changes in the interest rates in the developed world.

The improvement in financial savings during the last nine years channelized massive inflows into the equities market through the mutual fund (MF) route. During the previous nine years, the net inflows to equity mutual funds stood at Rs 7 trillion against net foreign portfolio investor ( FPI)  flows of Rs 3.1 trillion. The strong inflows helped the markets to mitigate the pain induced by heavy FPI selling last year.

In terms of regulation, the Securities Laws Amendment Act 2014 endowed Sebi with enhanced powers, including search and seizure, attachment and recovery, authority to call for information from any person,  and powers of disgorgement. In 2015 the erstwhile commodities derivatives regulator was merged with Sebi. Sebi also had its first woman chief, who led the transformation to a T+1 settlement cycle for the Indian stock market.

Over the last decade, investor-friendly norms have helped the mutual fund industry quadruple its assets under management. Sebi also brought in the enhanced framework for new products like REITs and InvITs, increased disclosures by listed companies, IPO norms, enhanced corporate governance, an overhaul of the ESG framework, and several amendments to regulations related to Foreign Portfolio Investors and Alternative Investment Funds.

The NDA government also launched the first International Financial Services Centre (IFSC) Gujarat International Finance Tec-City (GIFT City). And over the years, it established a unified authority for regulations, an international arbitration centre and a bullion exchange at IFSC.