Modi 3.0 is ready with a strategy to move ahead with its 'Coalition Dharma.' For the stock markets, the good news is that the BJP will be in full control of India's economic and security related policy making, since it will retain all the key portfolio's including finance and commerce to national security and foreign policy, sources in the know of government formation told BW. The oath ceremony of PM Modi and key cabinet ministers is scheduled today from 7:15 onwards at Rashtrapati Bhavan in New Delhi and portfolios will be distributed next week to the ministers.
Home, Defence, Finance, External Affairs, Aviation, Petroleum and Commerce And Industry are among the top portfolio's in India's government that will be under the BJP. This is to ensure continuity of India's major policy moves and its global positioning, the sources said. BJP's alliance partners will be given lower rung portfolios like railways, health, animal husbandry and minority affairs, the sources said.
Nifty and Sensex have already recovered fully from the June 4 lower levels and closed near their all time highs on Friday as Prime Minister Modi seemed set to take oath for the third consecutive time, a record since 1962. All the key ministries and portfolios being retained by the BJP may give higher confidence to the markets in continuity and stability of policy making.
"While a few ministerial faces are expected to change and portfolio's likely to be reshuffled among BJP's top rung leaders, the party will retain all the big ministries. Alliance partners know they cannot bargain so hard with the PM to snatch away key ministries that drive India on the international front. The PM will be in full control of the key policy decisions," a BJP leader said.
BJP has 240 elected members in India's 543 seat Parliament. The NDA Alliance Partners are supporting PM Modi and BJP with 32 seats for which they will seek a few ministerial berths. Bihar's JDU with 12 seats and Andhra Pradesh based TDP with 16 seats are the frontrunners supporting the BJP in government formation. Maharashtra's Eknath Shinde led Shiv Sena has six seats to support the BJP. The opposition still lacks strength to stop the government from passing any major bill in the Parliament since BJP alone has a higher number of seats than the entire opposition alliance partners combined. Even if BJP's alliance partners walk out on any issue and all the alliance partners oppose any bill, it will still pass with the strength of BJP alone.
On June 4, the stock markets had witnessed its worst fall in more than three years as BJP was seen falling short of majority mark of 272 to form government on its own. The markets expected that this would weaken PM Modi's hold on BJP, giving a chance to the opposition to stake claim to the government with tall promises to alliance partners. But the stock markets recovered sharply from the fall as BJP led NDA Alliance partners held a widely televised party meeting to re-elect Modi as the PM candidate and pledged their support. On the day he was re-elected to lead as PM, Modi said he would not shy away from taking big decisions.
Budget presentation of Modi 3.0 will be the next big trigger for the stock markets, experts said.
