With exit polls projecting Bharatiya Janata Party led new Government, the benchmark Sensex skyrocketed to a new life-time high of 24,068.94. The broader index Nifty also surged to a new record high of 7,172.35, in the third straight record-setting session. Rupee also shot up by 37 paise to Rs 59.68 per dollar.
Hopes of a stable business-friendly Government at the Centre led by Narendra Modi helped the Sensex to conclude the session at a new high of 23,871.23, showing a sharp gain of 320.23 points. Nifty also ended the day at a new closing high of 7,108.75, logging a rise of 94.50 points.
The BJP-led NDA is projected to form the Government at the Centre with exit polls on Monday night giving between 249 and 290 seats to the Narendra Modi-led grouping, which is close to the half-way mark in the 543-member lok Sabha.
Both, stocks as well as forex markets have given a warm welcome to the country's next Prime Minister. Interestingly, on January 20, 2009 when Barack Obama assumed the office as the 44th President of United States of America (USA), Dow Jones plummeted by 4 per cent or 332 points. It was the biggest fall in the index on the first day of any US President. Now all eyes are on how the Indian stock markets would react on the day Narendra Modi comes to power.
Before Obama assumed power, economy in US was also struggling with similar issues which are prevailing in the country right now. While the economy was tackling a slowdown, the market reaction to Obama becoming the president was negative. But in India, things are looking completely opposite.
In US, during the run up to forming the new Government, Dow Jones had slid by almost 1,000 points in a month's time. But Indian markets have out performed its global peer as it has surged by almost 1,400 points in the last month on hopes of Narendra Modi taking charge as the new Prime Minister of the country.
An uncanny resemblance between Obama and Modi is that the ascent to the top of both the leaders was also buoyed by the aspirations of the common man. Just like the common man is expecting the moon from Modi's ascent to Prime Ministership, Obama's arrival in 2009 too had been driven by similar expectations.
While markets have been making new highs, brokers are more concerned than overjoyed with the 1,500 points rally in the last three sessions. Ashok Agarwal from Escorts Securities said, "The rally has seen almost no participation from retail investors as most of the buying is coming for foreign institutional investors (FII) and domestic institutions."
While commenting on the overall mood of small investors, Agarwal added, "Our smaller clients are only booking profits and not initiating any long term investments. The only retail participation is coming from short term traders who are buying in the morning and booking profits by the end of the session."
Fortune Fiscal's Jagdish Thakkar stressed that the current market is only in the hands of FIIs and other institutions. "Retail investors are mainly net sellers. They have taken full advantage of the rally and are booking profits."
As far as FII buying is concerned, Thakkar said, "Most of the FII buying is coming in bank, infrastructure, real estate and capital goods sector, while they are selling in the pharmaceutical sector."
Expecting the markets to continue to rally till the final election results are out, Rakesh Bansal of R K Global said, "The current surge in markets clearly signifies that Narendra Modi is going to be the next Prime Minister. We expect markets to continue to surge for the next few days until the momentum dies out."
He further stressed that once the buying momentum fizzles out, markets are expected to correct sharply. "FII buying is strong in banks and infrastructure shares. It is expected that the new Government would clear out all the pending infrastructure projects which in turn would help reduce the bad debts of public sector banks."
The sentiments in the domestic markets was also boosted by data showing that foreign funds have been investing heavily in the Indian markets. As per the data provided by the stock exchanges, FIIs bought shares worth Rs 2,026.23 on Tuesday alone. In the last two sessions, FIIs have invested over Rs 3,200 crore in equity markets. Even rise in retail inflation was not able to restrict the rise in the markets.
Indication of higher opening in US index futures also boosted the market sentiment. On Sensex, 24 stocks advance while the remaining 6 declined. On Nifty as well, of the 50 stocks comprising the index, 40 shares advanced while only 10 ended in red. BHEl was the biggest gainer on Sensex and surged by 10.25 per cent. Other gainers included Hero MotoCorp, ONGC, Tata Power, Wipro and Reliance Industry which surged by 5.39 per cent, 3.81 per cent, 3.62 per cent, 3.36 per cent and 3.15 per cent respectively. Dr Reddys dropped 3.99 per cent, the biggest drop in the six Sensex losers of the day.
Among the BSE sectoral indices, power index rose the most by 3.26 per cent. Consumer durables, oil&gas, IT, capital goods, real estate and technology indices surged by 2.92 per cent, 2.84 per cent, 2.59 per cent, 2.51 per cent, 2.44 per cent and 2.23 per cent respectively. However, healthcare index fell 0.45 per cent.
With the stock markets continuing to record sharp gains for the third straight session on Tuesday, as many as 225 stocks touched their 52-week high on the Bombay Stock Exchange. Among major companies who scaled their one-year peak were ACC, BHEl, BPCl, Coal India, HDFC Bank, HPCl, ICICI Bank, l&T, NMDC, Tata Motors and Tata Steel.
Shares of power, consumer durable, refinery, information technology (IT), capital goods, real estate and technology shot up on persistent buying. In three straight days, the Sensex has gained over 1,500 points and the Nifty nearly 450 points ahead of May 16 election results.
Market breadth turned positive as 1,623 stocks finished with gains, 1,268 stocks ended with losses while 147 ruled steady. The total turnover rose to Rs Rs 4,620.58 crore from Rs 3,592.61 crores on Monday.
Meanwhile, tracking rising stocks, the rupee also surged by 37 paise on tuesday to end at a nine-month high of Rs 59.68 per dollar on robust foreign capital inflows into equities after exit polls projected BJP-led NDA would form the next government at the Centre.
Weakness of the dollar in the international markets also boosted the rupee that posted its strongest gain against the dollar in two weeks, a forex dealer said. The BJP-led NDA is projected to form the government at the Centre with exit polls on Monday night giving between 249 and 290 seats to the Narendra Modi-led grouping, which is close to the half-way mark in the 543-member lok Sabha.
This is the best gain for the rupee since April 25 when it appreciated by 47 paise. As per historic data, the rupee had last ended at 59.41 per dollar on July 29, 2013. Experts further added that the banks and exporters preferred to reduce their dollar position on hopes of more foreign capital inflows on the back of strong equity market.