Sensex Tops 24K Two Days Ahead of New Sarkar
Market scales new high as FIIs pump in .` 2kcr on Tuesday; local funds turn sellers
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.”