Sensex Hits Record High of 23,048 Ahead of Exit Polls
The BSE Sensex surged over 700 points to a record high of 23,048 on Friday, while the broader Nifty also hit an all-time high of 6,871, rising over 200 points. Traders said markets are sensing a victory for Narendra Modi-led BJP in elections set to conclude next week.
Exit polls, which will show how India has voted, will be issued after the last votes are cast on May 12. Actual results will be unveiled on May 16.
Polls have consistently shown the BJP and its prime ministerial candidate Mr Modi ahead, raising expectations the opposition party, which is seen by markets as being more investor- and business-friendly, will either win or come close to an outright majority.
The Sensex and Nifty are up nearly 9 per cent year-to-date amid strong buying by overseas investors, who believe the new government will kickstart India’s investment cycle and speed up reforms. FIIs have bought shares worth over $5 billion in 2014.
Sectors seen most likely to benefit from a Modi win led the gains. Infrastructure shares such as Ambuja Cement surged, while the Bank Nifty hit a record high on hopes a new government would frame policies that would aid the economy.
“There is optimism that markets are getting re-rated after the election, and people are betting on that,” said Deven Choksey, managing director at KR Choksey Securities.
“People are buying into quality blue-chip stocks, such as ONGC or Reliance. We also advise clients to stay invested in known ideas,” he added.
Gains were broad-based, with 46 out of 50 listed companies in the benchmark Nifty rising. ICICI Bank closed 7 per cent higher, while State Bank of India gained 3.9 per cent.
Infrastructure shares rose on hopes a BJP-led government would revive a stagnant investment cycle. Ambuja Cement gained 7.4 per cent while ACC rose 5.6 per cent.
Index heavyweight Reliance Industries gained nearly 3.9 per cent while Oil and Natural Gas Corp. surged 4.2 per cent.
Still, Friday’s rally is surprising considering markets have been choppy ahead of the electoral verdict next week. The BSE Sensex and Nifty have shed 2 per cent since the peak registered on April 25.
Gains today were accompanied with high volatility. The NSE volatility index rose 10.10 per cent to 37.76, a level close to its 52-week high of 38.04. The volatility index is often referred to as the fear index or the fear gauge because as it rises, market participants need to become more proactive and careful about their portfolios.
The Sensex closed at record high of 22,994, surpassing an earlier high of 22,939.31 points hit on April 25. The Nifty ended at an all-time high of 6,858.80.