Indian poll upset boosts stocks
Right-wing party is all set to take over
INDIA’s benchmark stock index soared over 6% to a record high on Friday after right-wing opposition leader Narendra Modi’s landslide election victory, and then pulled back on profit-taking.
The Bombay Stock Exchange index, known as the Sensex, climbed 6.15% to 25 375.63 points as results showed Modi and his Hindu nationalist Bharatiya Janata Party (BJP) were on track for a parliamentary majority.
But the Sensex then gave up a big chunk of its gains to close just 0.90% higher at 24 121.74 points.
“The Sensex gave the election results a booming salute early on, and then did what markets usually do — which is to look at the road ahead,” said Alok Churiwala, head of Churiwala Securities in Mumbai.
HSBC economist Leif Eskesen said that even though Modi had won an impressively strong mandate, economic recovery was “likely to be protracted”.
The economist expected India’s growth to pick up only marginally to 5.3% in the current financial year from an estimated 4.9% last year — half the rate notched up during India’s boom times. “The market will take a breather. Global economic signs are also not good,” Churiwala said.
But Churiwala said he believed the undertone of the Indian market was bullish, and the Sensex could surge to a record 26 500 points in a few months.
Modi rode a wave of voter support with his message of jobs, development and economic revival. His BJP ousted the leftleaning Congress party, which has ruled India for a decade and dominated the country’s politics for most of its post-independence history.
The influential Federation of Indian Chambers of Commerce and Industry called Modi’s “decisive mandate” a “positive for India”.
“It is amply clear the country, especially the youth, wants development and good governance,” said chamber president Sidharth Birla. He hoped that Modi’s win would restore investor confidence in India.
Share prices of infrastructure and energy companies surged, particularly those whose owners are thought to be close to the BJP. Adani Enterprises, controlled by stalwart BJP supporter Gautam Adani, rose as much as 17% to 585 rupees.
The rupee surged 1.14% to 58.62 against the dollar, building on gains in recent weeks that have been fuelled by expectations that a victorious Modi would introduce reforms to turn the economy around.
India’s stock market has risen 5% in the past week alone as optimism returned, despite low investment, weak growth, high consumer inflation and widespread corruption. — AFP