A day after exit polls showed Prime Minister Narendra Modi would retain power with a bigger majority in the Parliament, with financials leading the charge, shares surged on the bourses on Monday.
Domestic financial markets cheered exit poll results showed that ruling NDA is likely to will the general Lok Sabha elections on Monday, with the benchmark BSE Sensex skyrocketing over 1,100 points, and the rupee appreciating 79 paise against the US dollar.
After soaring over 962 in the early session, the 30-share index pared some gains and was trading at 39,047.
In similar movement, the broader NSE Nifty was trading 203.05 points, or 1.78 percent, up at 11,610.20.
Top gainers in the Sensex pack include Maruti, L&T, SBI, ICICI Bank, RIL, M&M, IndusInd Bank, Axis Bank, Yes Bank and Vedanta, rising up to 4 percent.
On the other hand, Bajaj Auto, Infosys and HCL Tech slipped up to 2 percent.
Exits polls, following the mammoth seven-phase voting, showed Narendra Modi’s National Democratic Alliance (NDA) projected to win between 339 and 365 seats in the 545-member lower house of parliament.
The results of the seven-phase polls will come out Thursday.
"The exit polls have been better than market expectations, with the ruling party getting a comfortable majority. The market is likely to rally further, but the rally may not be significant as there are challenges of not so encouraging earnings growth, lower liquidity, slowing economy and global challenges," said Naveen Kulkarni, Head of Research, Reliance Securities.
There could be sector-specific rally. Infrastructure and banking stocks could do well, he added.
“I expect another 2-3 percent rally in the market in the next 3-4 days based on the cue,” said Samrat Dasgupta, a fund manager at Esquire Capital Investment Advisors. "But once the results are out on Thursday, even if it is as expected, I don’t see much upside to the market.
“The economy is passing through a rough patch because a lot of data indicators are showing a slowdown, so people will wait for announcements from the new govt/cabinet to see what policies will be made,” Dasgupta said.
Despite facing criticism for weak job growth and farm prices, Modi turned the campaign into a fight for national security after tensions with Pakistan escalated earlier this year.
“I expect another 2-3% rally in the market in the next 3-4 days based on the cue,” said Samrat Dasgupta, a fund manager at Esquire Capital Investment Advisors.
Meanwhile, market regulator Sebi and stock exchanges have beefed up their surveillance mechanism to check any manipulative activities in the market this week in view of the high-octane election-related events lined up.
Foreign institutional investors sold equity worth Rs 1,057.82 crore on Friday, while domestic institutional investors purchased shares to the tune of Rs 1,809.76 crore, provisional data available with stock exchanges showed.
Elsewhere in Asia, bourses in China, Japan and Korea were trading on a mixed note in their respective early sessions.
Brent crude, the global benchmark, was trading at 73.28 per barrel, higher by 1.48 percent.
The rupee appreciated 79 paise to 69.44 against the US dollar in opening trade Monday after exit poll results suggested another term for the ruling NDA government, even as crude oil prices firmed up.
Forex traders said investors welcomed the exit poll results that predict a thumping majority for the current BJP-led government.
Sentiments were also buoyed by positive opening in domestic equities.
The rupee opened at 70.36 the interbank forex market, then gained further ground to touch 69.44 per dollar, displaying gains of 79 paise against the greenback.
On Friday, the rupee had settled at 70.23 against the US dollar.
Foreign funds pulled out Rs 1,057.82 crore in the capital markets on a net basis Thursday, provisional data showed.
The benchmark BSE Sensex was trading with gains of 718.11 points, or 1.89 percent, to quote at 38,657.65, while the NSE Nifty was trading at 11,615, up 207.85 points, or 1.82 percent.
--With agency inputs
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Updated Date: May 20, 2019 12:37:57 IST