With exit poll predictions fueling hopes of Bharatiya Janata Party (BJP) making a clean sweep in State assembly elections helped the benchmark Sensex snap out of its three session fall. Sensex on Thursday gained 249.10 points to 20,957.81 along with the broader index Nifty which rose by 80.15 points to 6,241.10. BJP effect was also seen on rupee as it appreciated by 30 paise and ended at Rs 61.75 per dollar.
Giving credit to the anticipated with of BJP, analysts said that after BJP’s performance in assembly elections, everyone is expecting to see a BJP lead Government at the centre as well. Stocks and the rupee opened with strong gains after results for exit polls for four states were released on Wednesday predicted that BJP would be the leading party in Rajasthan, Madhya Pradesh, Chhattisgarh and Delhi.
During early trade, Sensex sky rocketed by 456.89 points breaching the 21,000 psychological level to an intraday high of 21,165.6 mark but due to heavy profit booking, markets ended with only 249.10 points gain. This is its highest closing level for Sensex since 20,974.79 on November 5.
Rally was lead by bank index which surged 4.44 per cent followed by capital goods index which rose by 3.59 per cent. Real estate, power and oil & gas indices also gained by 1.48 per cent, 1.33 per cent and 1.25 per cent respectively. Healthcare and FMCG index came under most pressure as it fell by 1.47 per cent and 0.94 per cent respectively.
Heavy inflow of funds from foreign institutional investors (FII) on high expectations of BJP’s performance helped the domestic currency as well as the stock markets to register huge gains. Rupee soared to a new one month high of Rs 61.53 per dollar before closing with a gain of 30 paise at Rs 61.75 per dollar. As per the provisional data provided by the stock exchanges, FIIs invested Rs 1,151.51 crore in equity markets.
Analysts added that the currency appreciated as investors feel if the BJP comes to power, it will help the markets. Along with that, FIIs also invested heavily in the Power Grid follow-on public offer which was subscribed 4.77 times, analysts added. Commenting on the impact state polls would have on markets, Bank of America Merrill lynch said if the results are in line with the exit polls, it would be positive for the market, which is looking for a strong, stable government after the 2014 polls.