Exit polls impact: 1,442-pt jump in Sensex, rupee up

Biggest 1-day rise at BSE in 6 yrs ◗ Analysts believe Mr Narendra Modi’s BJP retaining power will ensure a continuation in reform measures initiated during the NDA’s first term

Mumbai, May 20: Indian equities on Monday posted their biggest singleday gains in over six years, the rupee saw its best day in two months and government bond prices surged after exit polls predicted a clear mandate for the Narendra Modi-led NDA in the Lok Sabha elections.

The BSE Sensex vaulted 1,422 points to close at a record 39,352.67 — the biggest one-day rise in the last six years. The NSE Nifty surged over 421 points to log its best single-day gains in over 10 years.

The Indian rupee appreciated by 49 paise, the biggest single-day gain in two months, to close at `69.74 against the US dollar following sharp gains in equities and forex inflows. At the interbank foreign exchange, the domestic unit opened at 70.36 and advanced to a high of 69.44 during the day.

Helped by across-theboard buying, the market capitalisation of BSE-listed companies jumped by `5,33,463.04 crores on Monday. As of Monday’s close, total valuation of BSE-listed companies stood at `1,51,86,312.05 crore. Analysts believe Mr Narendra Modi’s BJP retaining power will ensure a continuation in reform measures initiated during the NDA’s first term.

The market rally on Monday was broad-based, with financials leading from the front. Among Sensex constituents, IndusInd Bank, SBI, Tata Motors, Yes Bank, L&T, HDFC, Maruti and ONGC emerged as the top gainers — surging as much as 8.64 per cent.

With exit polls predicting a clear victory for Narendra Modi-led NDA, the jubilant market clocked its highest ever gains in 10 years, adding Rs 5,33,463.04 crore to investors’ wealth.

Driven by exit poll results, the Sensex rose 1,421 points, or 3.75 per cent to close at 39,352 while the NSE Nifty surged a record 421.10 points, or 3.69 per cent, to settle at 11,828.

The Nifty hit an intra-day high of 11,845.20 after opening higher at 11,651.9.

At the end of Monday's trading session, the market capitalisation of BSE-listed companies stood at Rs 1,51,86,312.05 crore against Rs 1,46,58,709.68 crore on Friday.

Over the past three trading sessions, the market capitalisation of BSE-listed companies has risen by Rs 7.48 lakh crore on expectations that Modi government would be voted back to power.

According to exit polls results, the NDA is set to come back to power with an even higher margin than in the 2014 elections.

"The exit polls have been better than market expectations, with the ruling party getting a comfortable majority. However, the market has been rallying for the last two days and it has factored the information to some extent. The market is likely to rally further but the rally may not be significant, as there are challenges of not-so-encouraging earnings growth, lower liquidity, slowing economy and global challenges. There could be sector specific rally like infrastructure and banking that could do well”, said Naveen Kulkarni, Head of Research, Reliance Securities.

Analysts are betting big on the election outcome. “The expected stability and continuity in policy, increase in FII inflow are keeping the markets positive. We are likely to see a revival in the corporate performance from the second quarter in this financial year,” said Pradeep Gupta, Co-Founder & Vice Chairman, Anand Rathi Securities.

“With benign inflation, well-anchored inflationary expectations and a relatively stable exchange rate; focus will be on how Modi is able to kick-start the slowing engine of consumption, revive private investments, provide a fillip to anaemic exports, alleviate farm distress, create adequate employment opportunities, rescue the precariously perched NBFC & real-estate sectors, generate adequate resources through better administration of taxes & divestment to fund the increasingly populist impulses,” said Ajay Bodke, CEO, PMS Prabhudas Lilladher.

“Any indication of the BJP alone getting a majority can lead to a sharp upsurge in equity markets and strengthening of the rupee. As markets have already discounted an NDA victory such an outcome will lead to markets trading sideways, with focus on the onerous quid pro quo in terms of plum ministries (especially economic & resources) that could be demanded by BJP's allies,” he further said.

However, analysts warned that if there is any disappointment on the counting day, the market could plunge in a big way.