Hopes of Modi's focus on small companies send shares soaring

Prime Minister Narendra Modi's efforts to revive India's small and medium enterprises (SMEs) has had its impact--atleast on the stock market. 

S&P BSE MidCap and SmallCap have comprehensively outperformed the broader Indian stock markets since Narendra Modi took oath as India's prime minister in 2014. 

Winning the election on the agenda of development, the Government has done some work to improve business efficiency of small industries and traders. Schemes, especially, MUDRA (Micro Units Development & Refinance Agency Ltd), have been designed to aid SME sector have been introduced. 

Last year, the government had allocated Rs 3300 crore to MSME sector, the highest amount any sector has received.

Clearly, markets anticipate that going forward, MSME which accounts for over 37% of the GDP and over 42% of total exports, will play a bigger role in India's economic growth.  

Nifty50 is currently trading at a near 18-month high, crossing 8,900-mark last week before retreating. However, S&P BSE MidCap has gained 85% and since May 2014, the S&P's SmallCap index is up over 80%. 

Nifty50, in April-May of 2014 hovered around 6700-mark.

According to the data available, the S&P BSE Small-cap index which was trading around 7,200-mark on 1 April, 2014, presently, it is trading at 12,797.66, a jump of 80%. 

While, the S&P BSE Midcap Index, which was trading at 7,198 during Modi's election period, has now crossed 13,000-mark, registering a rise of 85.16%.

According to the Ministry of Micro, Small and Medium Enterprises (MSME), last year, PM Modi had said, "While many think that large companies dominate, in reality, it is over 5.5 crore (55 million) small units like yours (MSMEs), which drive our economy through small, manufacturing, trading and service businesses…You (Ministry of MSME) should be able to run your business easily, not be harassed by officials, and get loans for your day-to-day activities, material for your operations and markets for your product.”