Indian Stock Markets hit record high with exit polls predicting BJP-led NDA as a winner

Indian Stock Market

Indian Stock Market

Exit polls are clearly stating the victory of the NDA and forecasting Narendra Modi as the Prime Minister of India, who will lead the BJP-led NDA at the centre. The BJP, together with its allies, will form a stable government. Hearing this, the Indian stock markets have gone all time high for a third consecutive day.

This is happening because of optimism among the investors, who are sure about the reversal of the declining Indian economy. The major reason why investors are thinking about a better economy is because of the progressive election campaigning by the BJP. One of the main agendas picked up by the BJP and Narendra Modi during election campaigns was the country’s economy, and how he and his team has managed to develop Gujarat and will do the same at national level if they come to power. He also talked about the recent inflation and slowdown in economy. Everyone can relate to this and thus, sees a hope in the Modi government. Moreover, the market has been projected as more investor-friendly during campaigns. It is surprising to know that the market gained even before the declaration of exit poll results. Also, a growth of 18.7% in the NSE index was noticed on September 13 when the BJP announced the name of Narendra Modi as its prime ministerial candidate.

People are hopeful about the growth of India if Modi comes to power, and its effect is quite visible in the stock exchange. It has also been noticed that with each campaign, the stock market indices have gone up. It is expected that the rupee and bonds will also touch new heights.

India is seeing a lot of expectation-based inflows. Shares worth Rs 1,268.78 crore have been bought in the cash market on Friday by overseas investors. This is the biggest purchase after March 28. The market is acting ahead of time, to be honest. The hopes are so high that some of the investors might have gone for their individual opinion surveys.

With a hope that the Narendra Modi-led government would come to power, a sharp rise in engineering, infrastructure, cement, industrial and power stocks was seen. It is expected that the Modi government would work on infrastructure and devise pro-investment strategies. Domestic industry shares are also hitting all-time highs. Gain has been noticed in shares of ICICI Bank Ltd, Ambuja Cement, Bharat Heavy Electricals Ltd., and others in infrastructure sector.

On the other hand, some investors are cautious because exit polls and opinion surveys are not correct all the time. Size, diversity and complexity of the electorate always add an angle of inaccuracy.

The BJP and its allies need 273 seats out of 545 seats in the parliament to form the government. Most of the exit polls are predicting that the party will get parliamentary seats from 261 to 289. As per estimates by experts, the government would be stable even at 240 seats, and this will also impact the stock market and let it gain 15-20% in the next month. The result of five-week long elections will be declared on May 16.

Related Information:

Expectations from BJP’s Budget 2014-15