Onlookers watch share prices on a digital broadcast on the facade of the Bombay Stock Exchange headquarters in Mumbai yesterday. The Sensex rose 2.35% to hit 23,453.29 points, surpassing its previous record of 23,048.49 on May 9.
Reuters/Mumbai
Indian shares surged to their second consecutive record high yesterday as blue-chips such as Larsen & Toubro jumped on rising hopes that exit polls would show the Bharatiya Janata Party and its allies winning a majority in the elections.
The benchmark BSE index rose as much as 2.52% to a record high at 23,572.88, while the broader NSE index rose as much as 2.35% to a life high of 7,020.05, surpassing its previous record hit on Friday.
A win for a BJP-led coalition is widely seen as setting the stage for a revival in confidence, investment and growth as Asia’s third-largest economy steers through a rough patch.
India’s NSE index has surged 18.74% since Narendra Modi became the BJP candidate on September 13, as the opposition party is perceived by markets as being more business friendly at a time when the economy is growing at its slowest pace in a decade.
“Markets got a wind of exit poll showing a clear majority for the BJP-led allies, which got extrapolated as better growth prospects for India,” said Deven Choksey, managing director at K R Choksey Securities.
The BSE index ended up 2.42% at 23,551, while the NSE index ended 2.27% higher at 7,014.25, adding to their over 3% gains on Friday. Gains were broad-based, with 25 out of 30 listed companies on the benchmark BSE index posting rises.
However, risk was also seen increasing as NSE’s volatility index, or India VIX, hit its highest intraday level since March 11, 2009, before ending 1.6% lower. Also on watch, consumer price inflation data due later in the day, the last one before the central bank’s next policy review on June 3.
Domestic-oriented shares led the rally, with the NSE bank sub-index hitting a record high. State Bank of India gained 3.2%, while Larsen & Toubro rose 3.3%. Infrastructure shares also gained, with Ambuja Cements up 2.1%, while Bharat Heavy Electricals surged 2.4%.
Reliance Industries gained 3.1% after the company and its partners in a gas block said on Saturday they were taking the Indian government to arbitration seeking implementation of higher gas prices.
Rupee at near 10-month peak before RBI’s intervention
The rupee fell slightly yesterday, retreating from a nearly 10-month high hit earlier in the session, on the back of suspected heavy dollar buying by the central bank ahead of exit polls.
Initial gains in the rupee tracked a rally in Indian shares to record highs on widespread hopes that those projections would show the Bharatiya Janata Party and its allies winning a majority in the elections, given the opposition is seen by markets as being more investor friendly.
“There was relentless buying interest seen from state-run banks. The exit polls are likely to have their impact on the rupee tomorrow. If there is no clear majority for the NDA (National Democratic Alliance), we can expect some nervous trading,” said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank.
The partially convertible rupee closed at 60.05/06 per dollar compared with 60.02/03 on Friday.
The unit gained to as high as 59.51, its strongest since July 29.
Most dealers said the heavy buying by state-run banks was on behalf of the central bank, looking to limit the volatility in the rupee, in the face of foreign fund flows into the share market.
In the offshore non-deliverable forwards, the one-month contract was at 60.36 while the three-month was at 61.07.