Exit poll euphoria: Sensex kisses 24,000, ends at record 23,871
Continuing with its record run, markets on Tuesday touched new highs after exit polls on Monday predicted a clear majority for the Bharatiya Janata Party (BJP) and its allies in the Lok Sabha elections.business Updated: May 13, 2014 23:35 IST
Continuing with its record run, markets on Tuesday touched new highs after exit polls on Monday predicted a clear majority for the Bharatiya Janata Party (BJP) and its allies in the Lok Sabha elections.
After crossing the 24,000-mark for the first time ever in intra-day trade, the benchmark index eased slightly to a close at a record 23,871.23, up 320 points, or 1.4%. It touched an all-time high 24,068.94 during the day.
Hopes of a stable government at the Centre also helped the broader National Stock Exchange (NSE) Nifty gain 95 points, or 1.4%, to end at a lifetime high of 7,108.75. It touched a fresh all-time intra-day high of 7,172.35.
Tuesday’s rally added `1,32,753 crore to investor wealth.
The Sensex has gained 1,526 points in the past three sessions, leading to speculations that the current rally may be a bubble.
Regulators, however, moved to soothe frayed nerves, saying that all systems are in place to curb excessive volatility, even as finance minister P Chidambaram asked Securities and Exchange Board of India (Sebi) and Reserve Bank of India (RBI) to remain alert and take necessary actions to curb sudden swings.
“Exit polls, which predicted a victory for the NDA, gave a fillip to the markets,” said Dipen Shah, head, private client research group, Kotak Securities.
Heavy foreign inflows due to a slowdown in the Chinese economy also aided sentiments, overshadowing weak macroeconomic data released after market hours on Monday.
“India is the most preferred destination for FIIs for investing among emerging markets because China has structural issues,” said VK Vijayakumar, investment strategist, Geojit BNP Paribas Financial Services.
Of the 30 Sensex stocks, 24 gained led by BHEL (up 10.3%). As many as 225 stocks touched their 52-week high on the Bombay Stock Exchange (BSE).
With market authorities working to guard systems from any sudden volatility on and around result’s day, the BSE and the NSE on Tuesday relaxed the dynamic price bands in the derivatives segment. Dynamic price bands prevent acceptance of orders placed beyond the price limits.
Chidambaram also called upon regulators and ministry officials “to be in a state of readiness and take necessary action if the situation so warrants”.
Sebi chairman UK Sinha sought to calm the markets saying the regulator is keeping a very close watch on stock movements. “If we find that anybody is doing anything wrong we will take prompt action,” he said.
RBI governor Raghuram Rajan too said: “We are in many ways prepared for any kind of volatility that might emerge over the next few days”.
However, analysts and brokerage firms have advised investors to trade cautiously. “We believe the new government’s announcements on policy pertaining to reforms will be critical for sentiments to sustain in the short-term,” said Shah.