Sensex clocks highest one-day gain in 10 years as Indian markets celebrate results of exit polls
- India’s stock markets achieved near-record highs on expectations of a solid electoral victory by the Narendra Modi-led National Democratic Alliance (NDA) in India’s general elections.
- The Sensex and Nifty both opened more than 2% higher or over 800 points and 240 points, respectively, following the release of exit polls the previous evening.
- All exit polls point to a return of the BJP-led National Democractic Alliance (NDA) administration. The overall tally for the NDA is pegged at between 287 and 365 seats in the 543-member Lok Sabha, translating into a comfortable majority for the ruling government.
The Sensex and Nifty both closed nearly 4% higher or over 1400 points and 400 points, respectively, following the release of exit polls the previous evening. The major gainers included SBI, Yes Bank and L&T. This was the indices’ highest one-day gain since 2009.
The rupee also rose more than 1% against the dollar, reaching 69.36. It could appreciate to 68 in the coming days should the exit polls prove right.
AdvertisementAll exit polls point to a return of the BJP-led National Democractic Alliance (NDA) administration. The overall tally for the NDA is pegged at between 287 and 365 seats in the 543-member Lok Sabha, translating into a comfortable majority for the ruling government.
Some of the polls also suggested that the BJP’s main national rival, the Congress, would fail to breach the 100-seat mark owing to losses in the Hindi heartland.
However, exit polls in India have had a patchy record in the last few elections. While they have predicted the correct winner more often than not, they have underestimated the number of seats. As a result, market gains, will be limited until counting gets over later this week on Thursday.
Investors favour a majority BJP government as it portends policy continuity and stability in governance for another five years. An opposition victory or a weak coalition government would be unfavourable scenarios for both domestic and foreign investors as it increases risk perception.
In fact, while a BJP victory has mostly been priced in by the markets, a stronger result than expected will lead to a higher upside, according to CLSA, a brokerage.
That being said, electoral results only have a short-term bearing on markets. The real long term gains are a result of growth and economic performance. With a rising deficit, jobs crisis, financing crunch and deficient monsoon, the incoming government will have a lot to deal with once it comes to power.
India exit poll results 2019: All surveys predict a full majority for Narendra Modi-led NDA
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