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HomeUncategorizedSensex Hits Record High Above 24,000 as Exit Polls See Modi Victory

Sensex Hits Record High Above 24,000 as Exit Polls See Modi Victory

The BSE Sensex surged over the psychological 24,000 for the first time on Tuesday as markets reacted positively to exit polls, most of which predicted a clear majority for Narendra Modi-led National Democratic Alliance in elections concluded on Monday.

The Sensex settled at 23,871, after earlier rising to a record high of 24,068.94, while the Nifty ended at 7,108.75, rising 94.50 points. The 50-share Nifty hit a new all-time high of 7,172 on Tuesday.

Despite the sharp rally, the Sensex ended nearly 200 points off the day’s high and Tuesday’s gain is the smallest over the last three sessions.

“You may see one small move on sentiment just on Friday, but the euphoria of a stable government is in the price… From Monday onwards, Indian markets would take cue from global markets, and issues like monsoon, inflation and budget,” said Anil Manghnani of Modern Shares and Stock Brokers.

The Sensex has now gained over 1,500 points in just three sessions since Friday. The Nifty is up around 450 points during the same period.

The BJP-led NDA is projected to win between 249 and 340 seats, according to six exit polls. It needs 273 seats for a simple majority. The BJP’s own tally could be over 210-220 seats, the exit polls predicted. If the exit poll projections come true, India might be heading for a stable government under Mr. Modi, something investors have been rooting for.

“If the exit polls are accurate, a stable government seems to be a likely prospect. We think the markets will trade at a premium to long term average through 2014 as investors anticipate a spate of reforms which lead to a turn in the economic cycle,” said Jyotivardhan Jaipuria of Bank of America Merrill Lynch.

Narendra Modi-led BJP is seen by markets as being more investor- and business-friendly. The Nifty has already surged around 20 per cent since Mr. Modi became the BJP prime minister candidate on September 13. A large part of gains have come on account of strong buying by foreign investors, who have purchased cash shares worth about $4.3 billion so far in 2014.

“The exit polls confirm and strengthen our baseline expectation of a stable NDA-led government, which is a positive outcome. This, along with a gradual improvement in the growth outlook in 2015, a credible central bank and easing macro-imbalances bode well for India’s medium-term economic prospects,” Nomura said in a report.

FIIs bought shares worth around Rs. 2,500 crore over the last two sessions. Domestic institutional investors, who have been net sellers in markets so far, also turned buyers on Monday, although the quantum of buying was very small at Rs. 90 crore.

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