INDIA’S RIGGED STOCK MARKET CRASH BENEFITS CHINA AND CHIDAMBARAM

What is the link between former Finance Minister P. Chidambaram’s constant ranting against Prime Minister Narendra Modi’s mega economic package, stock market crash and the resurgence of China’s skirmishes on India’s border in the month of May? The two share a common goal, which is to distort the narrative about India’s rise, spoil the mood over PM Modi’s soothing economic aid to the masses and hence keep both business and social sentiments in the country anaemic. The scenario unravels by examining the mystery of the recent stock market crash, especially in May.

On 18 May, a Monday, the Nifty and Sensex index crashed by 3.5%, just a day after Finance Minister

Nirmala Sitharaman announced opening of the economy. The 18 May crash was special. Same day of the month over a decade ago, the mood in the markets was extremely buoyant. Nifty and Sensex had hit their 20% upper circuit as UPA-2 had returned to power in 2009. Then too, it was a Monday and markets had to be shut for trading due to upper circuit on the back of election results announced on Sunday. But this Monday of May has turned out to be a black-day for the Indian stock markets, even when there was calm globally. In fact, stock markets in the United States and Europe rose nearly 2% that day. If India was suffering due to lockdown, so was the world.

A story published in the Business Line on 18 May said that the foreign portfolio investors (FPIS) had stepped up their selling in

India since Prime Minister Narendra Modi announced a Rs 20-lakh crore economic package on 12 May. “At around noon on Tuesday, there were media news flashes on an address by the PM at 8 pm. Since then, FPIS have not been net buyers in the market for a single trading session, data show,” the story said.

In just four trading sessions since PM Modi made the announcement, the

Nifty index crashed by 5.6% from the 12 May highs, as FPIS were constant sellers. The Bank Nifty crashed by nearly 7.15% during the same time. After Monday’s crash, the Nifty was down 8% and Bank Nifty by around 14% and there were no signs of recovery. Between 12 May and 22 May, FPI selling in the cash segment alone stood at Rs 10,893 crore. FPI net selling for May so far in index futures has been Rs 3,674 crore and same in stock futures stood at Rs 5,885. 85 crore.

What has gone so wrong with India since 12 May, that FPIS went on a selling spree, when globally there was no such pressure on markets? If it is about the Covid-19 lockdown, India still stands out in terms that it has managed the crisis well and saw the least number of deaths compared to other less populated countries. India has not even seen a runaway rally in April and underperformed the global markets for it to warrant such a massive sell-off.

MORE REFORMS UNDER MODI THAN UNDER RAO

Was the economic package a dud? No. In fact, the package has made Manmohan Singh’s 1991 budget announcements look puny.

A girl gets a haircut by beauticians wearing personal protective equipment (PPE) inside a salon cum beauty parlour after authorities allowed them to open, during a nationwide lockdown to slow the spread of coronavirus, in Kolkata, on Friday.