Stocks soar on result-day trade, close at 24,121.74
Indian stocks soared to record highs and the rupee strengthened against the dollar as it became clear that the country was set to get for a new, stable government headed by the opposition BJP on Friday.business Updated: May 16, 2014 23:25 IST
Indian stocks soared to record highs and the rupee strengthened against the dollar as it became clear that the country was set to get for a new, stable government headed by the opposition Bharatiya Janata Party (BJP) on Friday.
The Indian stock market has rallied for more than a month now on the hope that the BJP’s pro-business prime ministerial candidate, Narendra Modi, would win the national elections and guide the economy back on a growth path.
Sensex was up 216 points to close at a new peak of 24,121.74 on Friday as Nifty rose 80 points to end at 7,203. The rupee climbed 0.5% against the dollar, paring an increase of as much as 1.1%, an 11-month high.
With the election results out, analysts warned, any further rally in stocks would have to be justified rather than be swayed on sentiments that a Modi-led government would be best able to revive an economy growing at its slowest in a decade.
Watch video: Election result impact, markets give thumbs up?
In signs of the market’s confidence in Modi, the value of Indian stocks has risen some $332 billion since September 13, 2013 when the BJP announced his name as their prime ministerial candidate.
On Friday, bank shares were among the top gainers as investors shifted into stocks more geared to recovery. Domestic-focused shares such as ICICI Bank and Ambuja Cements soared, while power companies surged on bets improved infrastructure will boost electricity use. Adani Enterprises, one of the biggest companies in Gujarat, climbed 11% to the highest level since 2011.
Investors will now expect the BJP to deliver. Most immediately a Modi-led government is expected to soon name key cabinet posts such as the finance ministry, which is widely seen as going to senior party leader Arun Jaitley.
Other critical areas for investors include the new government's relationship with a central bank focused on inflation and the need to deliver a budget that can reassure markets and credit agencies about the fiscal deficit.