Sensex at new record high of 23,551 and Nifty breaches 7,000 mark on expectations of a stable government in place
Continuing the spurt seen on Friday last, stock indices, on Monday, surged further to close at new highs on expectations that the exit polls would anoint the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) as the clear winner in the parliamentary elections which concluded on Monday.
The S&P BSE Sensex closed at 23551, an all-time high closing, with a gain of 556.77 points or 2.42 per cent. The Sensex also recorded a historic intra-day high at 23572.88.
On the National Stock Exchange (NSE), the 50-share Nifty closed above the 7,000-mark with a gain of 155.45 points or 2.27 per cent at 7014.25.
“Nifty extended its rally for the third straight session, thereby breaching the 7,000 mark in anticipation of NDA-led alliance forming government,” said Rikesh Parikh, Vice President, Motilal Oswal Securities.
“Market has been led by banking, auto, infra and PSU sectors while pharma and IT were laggards. Going forward, expect market to remain volatile with exit polls announcement and final result to be announced by Friday,” Mr. Parikh added.
“The final phase of polling has ushered in new highs for the market. The trend is likely to continue if the current frenzy is anything to go by,” said Amar Ambani, Head of Research at IIFL. According to him, even before the exit polls were announced, the market seems confident of a stable government in place. “A win for a BJP-led coalition is widely seen as the trigger for a revival in confidence, growth and investment. For the time being, markets have shrugged off the risk of a weak monsoon due to rising probability of El Niño.”
“On Monday, the Nifty opened close to the previous closing of around 6,880, however, quickly got converted into explosive up to 6,975 levels and later on it closed above the psychological level of 7,000,” said Shrikant Chouhan, Head-Technical Research, Kotak Securities, adding, “The market is moving upward mainly on the back of likely positive outcome on the day of exit poll as markets expect”.
However, he said, “such a move in frontline and index stocks is increasing the valuation gap between mid-size stocks and frontline stocks.” If the outcome of the election comes as per expectations, “then we can expect massive buying into mid cap stocks.”
Markets were rallying based on expectations that NDA would form the government but it could respond differently post the announcement of election results, said J. K. Jain, Head of Research, Karvy Stock Broking.
“We recommend taking partial profits in the trading positions as the Nifty is expected to open gap up in tomorrow’s session. However, long-term investors can wait for the actual election results and increase their exposure to equities significantly”. Meanwhile, the rupee closed at 60.06 a dollar against 60.03 on Friday. It touched an intra-day high of 59.51.
Rupee edges down
In a volatile session, the rupee on Monday rose to nearly ten-month high of 59.51 against the U.S. dollar but frittered away all the gains to end one paise down at 60.05 a dollar on late demand for the American currency.
At the inter-bank foreign exchange market, the rupee resumed higher at 59.98 against last weekend’s level of 60.04. It firmed up further to 59.51 on initial selling of dollars by banks and exporters.