Investor wealth soars Rs 5.33 trillion as exit polls predict return of NDA

"The exit polls would be seen as a modest positive for the Indian stock market as the market was largely factoring in the return of the BJP-led NDA government," Kotak Institutional Equities said in a research note.The report noted that market is largely factoring in return of BJP-led government. "We could see a small rally post May 23 election results if the results are in line with the market's expectations," it noted.

 

Mumbai:
Investor wealth soared by more than Rs 5.33 trillion as the benchmark BSE Sensex sprinted more than 1,422 points Monday after exit polls predicted a return of the NDA government led by the BJP.


Tracking the sharp uptrend in equities, the market capitalisation of BSE-listed companies jumped by Rs 5,33,463.04 crore Monday.
 

At the end of Monday's trading session, the market capitalisation of BSE-listed companies stood at Rs 1,51,86,312.05 crore against Rs 1,46,58,709.68 crore on Friday.

 

This is the third consecutive session of gain for domestic stocks and in these three trading sessions the market capitalisation of BSE-listed companies has jumped by Rs 7.48 trillion.
 

BSE Sensex zoomed past the 39,300 mark, over 1,422 points and NSE Nifty reclaimed 11,800 level Monday as investors cheered the outcome of exit polls that predicted a clear majority for the ruling NDA in recent general elections.
 

Barring Bajaj Auto and Infosys, all the index scrips settled with gains.
 

"The exit polls would be seen as a modest positive for the Indian stock market as the market was largely factoring in the return of the BJP-led NDA government," Kotak Institutional Equities said in a research note.
 

The report noted that market is largely factoring in return of BJP-led government. "We could see a small rally post May 23 election results if the results are in line with the market's expectations," it noted.

 

Accoding to market analysts,except for 2004 where the margin of error of all the exit polls went horribly wrong, rest of the election years from 1998 were fairly consistent in terms of the direction.

 

However, looking at the margin of victory as per the exit polls, it seems BJP-NDA will sail through even if one would assume a 10 per cent margin of error. Assuming that it’s a comfortable victory for BJP-NDA, we could see the up move converting into euphoria as the foreign institutional investors (FIIs) may again make a beeline to invest in an economy where there is political stability and visibility, said analysts.

 

If these results get repeated on May 23 then tactically the Indian market would outperform the global markets. However, what happens beyond that will depend on fundamental challenges specific to fiscal and growth dynamics," said If these results get repeated on May 23 then tactically the Indian market would outperform the global markets. However, what happens beyond that will depend on fundamental challenges specific to fiscal and growth dynamics," said Chhaochharia.


Talking about the risks to the market, he said: "There are two big risks, one is global factors and two, is policy stance. Global factors will matter for Indian markets despite strong domestic flows."

 

Importantly, investors would watch out for reforms narrative, said Chhaochharia. "For last five years, market multiples have re-rated because of the narrative around macro stability, around reforms and finally having a narrative around getting growth back on track over the longer-term."

 

On the policy front, Chhaochharia said: "What the government policy is around fiscal, reforms, disinvestment, funding arrangement for the banking sector – those policy steps will drive the market beyond the next two-weeks to one-month. In our framework, market could have an upside of anywhere between 5-10 percent from current levels."

 

In the forex market, the rupee strengthened and was trading higher by 58 paise to 69.65 against the dollar.


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