Sensex jumps over 2% to record high as investors cheer BJP victory

New Delhi: Indian stock markets rose to a record high on Monday, while the Indian rupee rose to the highest in four months, a day after the main opposition Bharatiya Janata Party (BJP) secured an absolute majority in three of the four state assembly elections.

The markets are counting on the Narendra Modi-led BJP coming to power in the 2014 general elections and while state election results can’t be extrapolated into general elections, they do serve as an indicator of the mood of the nation.

The benchmark BSE Sensex rose 2.3% in early trade to 21,483.74 points, while the broader Nifty on the National Stock Exchange rose to 6,332.5 points, its new high.

“Market buoyancy is essentially out of the election outcome we witnessed on Sunday with a single party getting a clear majority in at least three states,” said N.S. Venkatesh, chief general manager and head-treasury in IDBI Bank Ltd.

Meanwhile, the Indian rupee rose to 60.85 per dollar, a level last seen on 12 August. At 11.07am, the domestic currency was trading at 61.14 per dollar, up 0.46% from its previous close of 61.415. The unit, which had touched its lifetime low of 68.85 against the dollar on 28 August has recovered 12.67% since then.

 

Since January this year, the partially convertible Indian rupee has lost 10%.

Naresh Takkar, managing director and chief executive officer of rating agency Icra Ltd, said market rally is due to a combination of factors including the BJP’s election victory and positive macroeconomic data, “which seem to indicate that the economy is bottoming out”.

“It is difficult to say where the market is heading in the near to medium term but investors are expecting single party gaining in the upcoming general elections,” Takkar said.

At 11.07 am, the Sensex was trading at 21,313.21 points, up 1.51% from its previous close, while the Nifty was trading at 6,356.4 points, up 1.5%.“Foreign institutional Investors (FII) and other investors are expecting a policy certainty from these governments. My near-term outlook for the Nifty is around 6,300-6,350 levels,” Venkatesh said.

The biggest stock market gainers included State Bank of India (SBI), which rose 3.17% in intra-day trade. ICICI Bank Ltd gained 5.25%, Larsen and Toubro Ltd gained 5.06% and Oil and Natural Gas Corp. Ltd rose 4.21%

PRATIMA KUMARI

PGDM 1st SEM