Indian stock markets hit new highs on Monday, with exit polls predicting a third term for Prime Minister Narendra Modi and the BJP-led NDA. The BSE Sensex opened at a record high, climbing 2,178 points or 2.94% to 76,139, while the Nifty 50 was trading 579 points, or 2.57%, higher at 23,109 at 9:17 am.
At around 10:20 am, the Sensex was up 2,118.84 points at 76,080.15, while the Nifty 50 climbed 665.60 points to 23,196.30. The broader markets also witnessed a spectacular rally due to a sharp drop in volatility.
The prospect of continued investments in infrastructure and manufacturing under PM Modi boosted investor sentiment. This is why Nifty Energy, Nifty PSU Bank and Nifty Realty were the top gainers, rising 4-5% each. The market capitalisation of all companies listed on BSE increased by over Rs 11 lakh crore, making investors richer. Key sectors such as PSU banks, oil & gas, financial services, metals, realty and auto witnessed a rise of 3-5%.
The excitement of exit polls
Prashant Tapase, Senior Vice President (Research), Mehta Equities Ltd, said, “Dalal Street is expected to remain strong in early June on the back of optimistic exit poll results predicting a significant win for the BJP-led NDA.”
Meanwhile, Ravi Singh, Senior Vice President, Retail Research, Religare Broking also highlighted that all the exit polls are indicating a victory for the BJP, which has a positive impact on the markets.
“However, election-related uncertainty could lead to volatility. Investors should be prepared for volatility, but remain optimistic about a potential rally if the final results are in line with exit polls,” Singh said. Exit polls on average indicate that the BJP-led NDA will get around 370 seats in the Lok Sabha elections scheduled for June 4. According to market experts, the BJP-led NDA’s strong win predicted by the exit polls is expected to give Prime Minister Narendra Modi political leverage to implement land and labour reforms.
Investors also expect the Modi administration to continue efforts to establish India as a global manufacturing hub, attracting foreign companies such as Apple and Tesla to diversify their production beyond China. Strong GDP Growth Another factor contributing to today’s positive rally is India’s GDP growth numbers for FY24 and the fourth quarter, released last week.
India’s economic growth accelerated to 8.2% for the fiscal year ending March 2024, as reported last week. “Key catalysts include India’s GDP at a higher-than-expected 8.2% for FY24, Dow Jones jumping 574 points, possibility of interest rate cuts in September, early arrival of monsoon and 10% rise in GST collections to Rs 1.73 lakh crore in May,” Tapase said.
