Sen­sex Tops 24K Two Days Ahead of New Sarkar

Mar­ket scales new high as FIIs pump in .` 2kcr on Tues­day; lo­cal funds turn sell­ers

The Economic Times - - Front Page - OUR BUREAU

Over­seas port­fo­lio in­vestors stepped up pur­chases of In­dian stocks, lift­ing key in­dices to record highs and the ru­pee to its strong­est in 10 months on Tues­day as hopes of a Bharatiya Janata Party-led coali­tion form­ing the next govern­ment were boosted to near cer­tainty fol­low­ing Mon­day’s exit poll find­ings. The Sen­sex crossed 24,000 for the first time on Tues­day then re­treated as do­mes­tic in­vestors and traders took home some prof­its on wor­ries that gains could be capped in the near term. For­eign in­sti­tu­tional in­vestors on Tues­day pumped .` 2,026 crore into stocks, af­ter buy­ing stocks worth a to­tal .` 2,500 crore on Fri­day and Mon­day. Do­mes­tic in­sti­tu­tions, mean­while, sold shares worth a net .` 650 crore on Tues­day.

The Sen­sex rose 321.50 points to close at 23,872.50 while the Nifty gained 94.50 points to end at 7,108.75

Mar­kets are con­fi­dent about Naren­dra Modi be­com­ing the next prime min­is­ter af­ter exit polls unan­i­mously showed a vic­tory for BJP and its al­lies, bro­kers said. But the next bout of up­sides would de­pend on the num­ber of seats that the BJP-led Na­tional Demo­cratic Al­liance will se­cure. Elec­tion re­sults are due on Fri­day. “Mar­kets have fac­tored in the pos­si­bil­ity of a Modi govern­ment, which is ex­pected to re­vive the econ­omy,” said Nilesh Shah, man­ag­ing di­rec­tor and chief ex­ec­u­tive, Axis Cap­i­tal. The BSE Sen­sex rose 321.50 points, or 1.37%, to close at 23,872.50 af­ter touch­ing a high of 24,068.94. NSE’s Nifty gained 94.50 points, or 1.35%, to close at 7,108.75. Cap­i­tal goods, real es­tate, power and oil shares led gains, ris­ing 2-3%. While exit polls on Mon­day evening showed BJP and its al­lies win­ning from 249 to 340 out of 543 elected Lok Sabha seats, traders are ex­pect­ing the group­ing to get about 230-240, putting it within reach of the half­way mark. Bro­kers said in­dices could move 3-5% ei­ther way on elec­tion re­sult day if the ac­tual count is above or be­low that level.

The 13% plunge in the Vo­latil­ity In­dex (VIX), a mea­sure of traders’ per­cep­tion of near-term risks in the mar­ket, on Tues­day in­di­cates mar­kets are less jit­tery about the poll out­come. But the in­dex could turn jumpy be­fore Fri­day if wor­ries about BJP seat tally resur­face.

Be­yond that, the mar­ket will look to cues about pol­icy changes.

“Though there could the some short-term eu­pho­ria if the elec­tion re­sults ex­ceed ex­pec­ta­tions, the fo­cus will shift to the steps that the new govern­ment would take to re­vive the econ­omy,” said Shah of Axis. In the cur­rency mar­ket, the ru­pee ended at 59.67 per dol­lar, its strong­est close since July 29, up 0.63%, or 38 paisa, from its pre­vi­ous close of 60.05.

The lo­cal unit had ap­pre­ci­ated to an in­tra-day high of 59.59 per dol- lar when some large to mid-size pub­lic sec­tor banks started buy­ing dol­lars on be­half of the Re­serve Bank of In­dia, said deal­ers, sug­gest­ing that it was an “in­ter­ven­tion” to stem the sharp ap­pre­ci­a­tion and send­ing the ru­pee to an in­tra-day low of 59.93. “The ru­pee has ap­pre­ci­ated as over­seas in­vestors poured money into In­dian eq­ui­ties rais­ing de­mand for the lo­cal unit,” said NS Venkatesh, ex­ec­u­tive di­rec­tor, IDBI Bank. “Cus­to­dian (over­seas fund) in­flows would con­tinue to in­crease this week on po­lit­i­cal op­ti­mism. The ru­pee may rise to 59.25/ 59.30 per US dol­lar by May 16.”

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