Will Modi 3.0 attract more foreign investors to D-Street?

Domestic brokerage firms remain optimistic about the Indian economy and anticipate a strong inflow of foreign institutional investments (FIIs) into Indian equities following the inauguration of Narendra Modi's third term as Prime Minister.

Along with his cabinet of 71 ministers, PM Modi's administration is expected to maintain stable and non-populist governance, suggested the brokerage firm.

Phillip Capital highlighted that the distribution of cabinet seats signifies continuity and equitable treatment of allies, which it views positively.

The upcoming full budget in July will further clarify the possibilities and scope of each ministry, the brokerage said, adding that it expects a blend of social initiatives and continuity in capital expenditure and previously established policies and reforms.

Key ministries such as Defence, Home Affairs, Road Transport, Finance, and External Affairs will retain the same BJP leadership as in the previous term.

Other significant ministries, including Agriculture, Farmers Welfare, Rural Development, Health, Family Welfare, and Chemicals & Fertilizers, are also under BJP control.

“In the third term of this coalition, with well-experienced faces helming the key ministries, we see likelihood of incrementally positive/strong FII flows along with buoyant domestic flow,” Phillip Capital said.

“As a result, we retain our medium to long-term positive stance on Indian macro and equities,” the brokerage added.