The markets were buoyant with indices hitting new high as counting for Lok Sabha election results 2019 is underway. The NDA is leading in 342 seats.
BSE Sensex rallied over 900 points while the NSE Nifty soared over 270 points to hit their respective record highs in early trade Thursday, as counting of votes for the Lok Sabha election began.
According to traders, investor sentiment was boosted by initial trends that suggested a win for the ruling NDA. Investor sentiment has been buoyant since exit polls were announced on Sunday, with both the NSE index and the BSE index gaining 3.7 percent each the next session, a level last seen in 2014.
Amid market euphoria, the rupee also appreciated 26 paise to 69.51 against the US dollar in opening trade.
The 30-share index zoomed 907.91 points, gaining 2.32 percent at 40,018.12. Nifty was 271.15 point up, gaining 2.31 percent at 12,009.05 at 10.40 AM.
In the previous session, the Sensex ended 140.41 points, or 0.36 percent, higher at 39,110.21; and the broader NSE Nifty rose 28.80 points, or 0.25 percent, to 11,737.90.
Exit polls had predicted a clear win for Modi in the election that ended on Sunday, but such polls in India have sometimes proved misleading.
The ruling coalition is projected to win between 339 and 365 seats in the 545-member lower house of parliament with the Congress-led opposition alliance getting 77 to 108, an exit poll from India Today- Axis showed.
Investors broadly view the NDA and Modi as more pro-industry than the opposition-led Congress.
Modi’s government has had mixed success in its first term, facing criticism for slowing growth and a failure to create jobs while winning plaudits for implementing tough tax and banking reforms and infrastructure spending.
Investors expect a second term will give him time to carry through those reforms while pushing for more fiscal and monetary stimulus. The opposition fought the election on a policy platform promising better farm income and jobs.
Top Sensex gainers in morning trade include IndusInd Bank, SBI, L&T, PowerGrid, Yes Bank, Kotak Bank, ICICI Bank, RIL, HDFC, Bharti Airtel and Axis Bank, rallying up to 7 percent.
While, Vedanta, ONGC, Bajaj Auto and Sun Pharma slipped up to 1.92 percent.
Meanwhile, foreign institutional investors sold equity worth Rs 965.02 crore on Wednesday, while domestic institutional investors sold shares to the tune of Rs 157.75 crore, provisional data available with stock exchanges showed.
Elsewhere in Asia, bourses in China, Japan and Korea were trading on a negative note in their respective early sessions.
Brent crude, the global benchmark, was trading at 70.58 per barrel, lower by 0.58 percent.
The partially convertible rupee was trading at 69.51/52 per dollar versus previous close of 69.6750.
“As expected markets have rallied but for this rally to sustain concrete steps are needed to address liquidity and credit stress,” said Rajeev Pawar, a group head at Edelweiss Financial Services.
“Revival, reflation and reform should be the mantra going ahead,” he added.
Bonds at 10-year high
Low inflation, ample liquidity support from the central bank and expectations of easier monetary policy was helping sentiment for the bond market.
The benchmark 10-year bond yield was down 5 basis points at 7.21 percent after touching 7.19 percent earlier, its lowest level since 9 April 2018.
“Supply concerns remain but those will be there at all times for this year. RBI has done 250 billion rupees worth of OMOs so far. They need to maintain the tempo,” said Bekxy Kuriakose, head of fixed income at Principal Asset Management.
Investors said the health of the corporate and financial sector is going to be of paramount concern and steps to address these issues need to be taken by the new government and the central bank.
“At a time when there is uncertainty over economic growth, political stability and continuity allow an economy to progress and rise above hurdles over a period of time,” Sachin Shah, fund manager, Emkay Investment Managers.
“So this outcome offers hope that policy reforms will go in the right direction.”
--With agency inputs
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Updated Date: May 23, 2019 11:35:23 IST