Bharatiya Janata Party (BJP) outperforming Congress in the four State assembly elections on Sunday propelled benchmark Sensex to a new life-time high of 21,483.74, while the broader index Nifty surged to record level of 6,415.25 .
Analysts said that the stock markets rose on expectations of a similar splendid performance from BJP during the general elections too. BJP’s clean sweep victory in three States has improved the investor sentiment sharply as they are now gearing up to see a new BJP lead Government in the Centre soon, analysts further added.
As reported by The Pioneer in its December 9, 2013 edition, Sensex rose by 487.21 points to an all-time high of 21,483.74 and finally ended the session with a gain of 329.89 points at 21,326.42, index’s new all time closing high. Similarly, Nifty also closed at a record high of 6,363.90 after rising 104 points. Both indices surpassed their previous highs on November 3.
Rupee also cheered BJP’s performance and climbed to an almost four-month high of Rs 60.90 per dollar backed back strong inflow of funds in Indian equity markets from foreign institutional investors (FII). As per provisional data provided by the stock exchanges, FIIs invested a staggering Rs 2,473.17 crore in Indian equity markets on Monday.
The rupee surged to Rs 60.84 per dollar, its highest level in nearly four months in intra-day trade and fell back to close with a 28 paise gain at Rs 61.13 per dollar. Rupee finally closed at its two month high backed by FII investments along with heavy dollar selling from exports. Previously, rupee had touched an intra-day high of Rs 60.45 per dollar on August 12, and it had closed at Rs 61.07 per dollar on October 11.
“The recent gains in the currency are mainly attributed to the assembly elections. BJP, which is widely seen by investors as being more business friendly, swept recent state elections. Dollar weakness also continued to contribute to the gains in the rupee,” said Abhishek Goenka, CEO of India Forex Advisors.
Sectorally, out of the 13 sector indices on BSE, 12 indices ended the session with gains. The market rally was lead by capital goods and bank indices as they surged by 3.14 per cent and 2.93 per cent respectively. Apart from that, real estate and oil & gas indices also rose by 2.61 per cent and 1.71 per cent respectively. Consumer durable index alone ended the day marginally under pressure after falling by 0.11 per cent.
Across markets, five out of every 10 stocks rose and this pushed up investor wealth by Rs 75,000 crore on Monday. Capital goods and bank stocks were in the limelight.
Financial markets were in an uptrend in the past few sessions after exit polls predicted the BJP would do well. “...We believe wins in Delhi and Rajasthan will be interpreted as a boost for BJP’s prospects by financial markets and are likely to give the party additional momentum as general election campaigning starts to ramp up,” said financial major Nomura in a report.
Ahead of the lok Sabha polls, BJP yesterday handed a 4-0 drubbing to the Congress in state elections, snatching Rajasthan and retaining Madhya Pradesh with landslide wins, holding on to power in Chhattisgarh and falling just short of a majority in Delhi. The state assembly polls are viewed by many as a preview of the general elections, which are due early next year.
A Bank of America Merrill lynch report said the assembly poll results will place BJP as the “front runner” in the general elections. However, it added that while the recent results will reinforce the current opinion polls that show BJP as the “leading party,” it may not be enough to justify a “further increase” in the BJP tally