Indian stock markets experienced a significant surge on Monday, following the release of exit polls indicating a potential third term for Prime Minister Narendra Modi and the BJP-led NDA. The BSE Sensex hit an all-time high, rising by 2,178 points or 2.94% to reach 76,139, while the Nifty50 climbed 579 points or 2.57% to trade at 23,109 by 9:17 am.
By 10:20 am, the Sensex had increased by 2,118.84 points to 76,080.15, and the Nifty50 had surged by 665.60 points to 23,196.30. The broader markets also experienced a strong rally, largely due to a significant drop in volatility.
Investor confidence was boosted by the expectation of continued investments in infrastructure and manufacturing under PM Modi’s leadership. As a result, Nifty Energy, Nifty PSU Bank, and Nifty Realty emerged as the top gainers, each recording an increase of 4-5%.
The total market capitalization of all listed companies on the BSE rose by more than Rs 11 lakh crore, leading to increased wealth for investors. Key sectors such as PSU banks, oil and gas, financial services, metals, realty, and auto witnessed gains ranging from 3-5%.
Exit poll euphoria
Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, stated that Dalal Street is set to have a robust start to June due to the optimistic exit poll results, which predict a significant win for the BJP-led NDA.
On the other hand, Ravi Singh, Senior Vice President of Retail Research at Religare Broking, also emphasized that all the exit polls indicate a BJP victory, which has had a positive impact on the markets.
Singh further added that election-related uncertainty may cause volatility. However, investors should expect fluctuations but maintain optimism about a potential rally if the final results align with the exit polls.
According to the average of the exit polls, the BJP-led NDA is projected to secure approximately 370 seats in the Lok Sabha election on June 4.
Market experts believe that a strong victory for the BJP-led NDA, as predicted by the exit polls, will give Prime Minister Narendra Modi the political leverage to implement stricter land and labor reforms. Investors also anticipate that the Modi administration will continue its efforts to establish India as a global manufacturing hub, attracting foreign companies like Apple and Tesla to diversify their production beyond China.
Strong GDP growth
Tapse mentioned that one of the contributing factors to today’s positive rally is India’s GDP growth numbers for FY24 and the fourth quarter, which were released last week. According to the report, India’s economic growth accelerated to 8.2% for the financial year ending March 2024. This growth was primarily driven by government spending on infrastructure and a real estate boom.