Thu, Jun 20, 2024
Whatsapp

Stock market soars after exit polls forecast significant BJP victory

Sensex hits a record high in pre-market trading, rising more than 2,000 points as exit polls indicate a significant victory for the BJP.

Written by  Annesha Barua -- June 03rd 2024 09:46 AM -- Updated: June 03rd 2024 10:05 AM
Stock market soars after exit polls forecast significant BJP victory

Stock market soars after exit polls forecast significant BJP victory

Stock market today: Exit polls suggested that Prime Minister Narendra Modi would be re-elected and receive a large mandate, which would allow him to spend more on infrastructure and manufacturing to sustain economic growth. As a result, Indian stock futures climbed sharply early on Monday, and the currency also appreciated.

At 23,350, NIFTY 50 index futures were up almost 2.7% in early trade, suggesting the index may reach fresh highs when the cash market starts. In contrast to Friday's closing price of 83.46 in the spot foreign exchange market, non-deliverable rupee forwards were trading at 83.11 to the dollar.


The alliance led by Prime Minister Modi's Bharatiya Janata Party (BJP) was predicted by weekend exit polls to gain 303 seats in the 543-member lower house and probably secure a two-thirds majority, which would be sufficient to start the process of amending the constitution.

Although a victory was anticipated by many, if verified in the official results that are anticipated on Tuesday, the margin will exceed analyst projections and be seen favorably by equity markets that have reached all-time highs on the strength of economic expansion.

According to Rob Brewis of UK-based Aubrey Capital Management, "We had always felt that the economic progress made by most Indians over the last 10 years was sufficient to see Modi re-elected with ease."

"If this outcome is verified, I believe it to be a true vote of confidence, and Modi can now move forward with his plans. So perhaps we can get the faster development we require. The markets ought to approve of that.

PERMANENTISM

Based on figures released last week, India's economic growth surged to 8.2% in the fiscal year ending in March 2024, driven by government expenditure on infrastructure and a real estate boom.

Analysts believe that if Modi wins as big as the exit polls suggest, he would have the political capital to continue and possibly even push for more stringent labor or land reforms.

In a letter to clients, Citi analysts stated, "If exit polls turn out to be accurate, it would be a vote for continuity."

They noted that among the likely beneficiaries were conglomerate Larson & Toubro (LART.NS), Adani Ports (APSE.NS), and Bharat Electronics (BAJE.NS). "Medium-term, we expect stocks positively exposed to the focus on infrastructure/logistic and industrial/manufacturing to do well," they stated.

The Modi government has been courting foreign businesses such as Apple (AAPL.O) and Tesla (TSLA.O) to setup production as they diversify beyond China, and investors expect them to continue focused on this aim of making the nation a manufacturing hub.

It's possible that foreign investors, who withdrew from their $20.7 billion net investment in Indian stocks prior to the election, will use the vote's outcome as justification to make another purchase.

"Most clients we met with in recent months appeared to infer that political continuity would contribute to a stable macro-economic environment and continuing reforms," Goldman Sachs analysts stated.

Exit polls in India have a mixed track record, frequently predicting the wrong result. On Tuesday, the outcomes of the general election involving one billion eligible voters will be declared.

- With inputs from agencies

Top News view more...

Latest News view more...

PTC NETWORK