Indian shares gave up early gains and slipped into the red on Friday tracking global cues and on doubts over the exit polls that showed the ruling Bharatiya Janata Party winning in the Uttar Pradesh assembly elections that will increase chances of Prime Minister Narendra Modi’s second term at the Centre.
A possible interest rate hike by the US Federal Reserve at its policy review on March 15 also weighed on investor sentiment.
The 30-share benchmark Sensex opened up and jumped 148 points or 0.5% to touch 29,077 while Nifty touched 8,968 in early trade.
However, the Sensex and Nifty slipped into the red as investors were nervous over the authenticity of exit polls show the Bharatiya Janata Party winning in the Uttar Pradesh assembly elections. Both Sensex and Nifty regained some strength at the last hour of trading session.
The Sensex closed up 17 points or 0.06% at 28,946.23, while Nifty ended up 0.08% at 8,934.55, little changed from Thursday.
Bharti Airtel, TCS and L&T were up 1% each while HeroMoto gained 0.9%, Infosys and Wipro 0.7% each.
The Samajwadi Party, which is in power at UP, alleged that television channels were pressurised to fudge exit poll numbers that showed the BJP emerging as the single-largest party in India’s most populous state. Speaking to news agency ANI, SP general secretary Ramgopal Yadav dismissed exit poll numbers and said the SP-Congress alliance would win a majority.
Drawing analogy of exit polls going wrong for Bihar assembly election in 2015, Congress vice president Rahul Gandhi claimed the SP-Congress alliance will win the polls.
Markets jumped in the morning as a knee-jerk reaction as investors rejoiced the exit poll results that indicated BJP’s strengthening its foothold in more states such as UP and Uttarakhand, and a continuation of economic reforms in the days to come. On Thursday, Modi expressed hopes the Parliament will pass the crucial CGST and IGST Bills required to roll out Goods and Services Tax possibly from July.
Chances of February CPI inflation inching up for the first time in seven months coupled with some revival in industrial growth, which lowers chances of RBI rate cuts immediately, will also weigh on sentiments.
Asian stocks rose while the dollar surged to six-week highs on expectation the Federal Reserve is sure to hike interest rates at its meeting in mid March. Europe also traded in the green.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.2% in early trade following a firm Wall Street.
Nikkei was up 1.5% while Hang Seng and Kospi gained 0.3% each and Strait Times 0.46%.
The dollar firmed up to six-week highs against the yen ahead of US job data, which may raise chances of Fed rate hike on March 15.
The dollar was up 0.3% against the yen while the euro edged up against the greenback after European Central Bank president Mario Draghi said in a forward guidance that a reference to using all available measures to induce growth and inflation because the sense of urgency is not there. This indicates a rebound in the EU and a gradual unwinding of the easy money policy.