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The BSE Sensex and NSE Nifty today surged to new lifetime highs on all-round buying after the Bharatiya Janata Party (BJP) swept three out of 4 state polls and boosted hopes that a new government in 2014 general elections would be more business-friendly.
The BSE Sensex ended at closing high of 21,326.42 with a gain of 329.89 points or 1.57 per cent while the NSE CNX Nifty closed at 6,363.90 points, a hefty rise of 104.00 points or 1.66 per cent. Across markets, 5 out of every ten stocks rose.
This helped investor wealth soar by about Rs 75,000 crore.
Besides Bharatiya Janata Party's strong performance in Assembly polls in four states, sustained capital inflows and a firming trend in the global markets also helped markets cement gains.
Ahead of Lok Sabha polls, BJP yesterday handed a severe 4-0 drubbing to Congress in polls in which it snatched Rajasthan and retained Madhya Pradesh with landslide wins, holding on to power in Chhattisgarh and good show in Delhi.
The BSE 30-share barometer soared to an historic high of 21,483.74 points, before paring some gains to settle at an all-time closing high of 21,326.42, beating its previous record of 21,321.53 set on November 3. It had gained 287.82 points in the previous two sessions after exit polls showed Bharatiya Janata Party putting up a good show in four states.
Buying was mainly seen across-the-board with 12 out of BSE 13 sectoral indices closing in the green. The BSE Consumer durables, however, ended with a fall of 0.11 per cent.
The 50-share Nifty of the NSE also scaled a new intra-day record high of 6,415.25, surpassing its previous intra-day high of 6,357.10 registered on January 8, 2008.
Mirroring stocks movement, rupee strengthened rose to almost four-month high of 60.84 (intra-day) and was last last trading at 61.06 level against the US dollar.
Among the 30-share Sensex pack, 26 stocks closed with gains while four finished lower. ICICI Bank led the Sensex gainers with a rise of 5.16 per cent, Sesa Sterlite by 5.04 per cent, Larsen & Toubro (L&T) by 4.52 per cent and Maruti Suzuki India by 3.85 per cent and Oil & Natural Gas Corp (ONGC) by 3.48 per cent.
Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities:
The cyclicals did well whereas the defensive sectors largely underperformed as markets became more optimistic on the long Ė term domestic growth story. BSE Bank and Capital Goods indices were the leaders in trade today as the benchmarks touched all-time highs. Other notable gainers included Realty, PSU, Oil and Gas, Power, Auto and Metal indices.
Going forward, the focus of the market would again shift to the FOMC meeting and expectations about the US Fed taper program, in the wake of strong economic data from that economy. Markets will also watch out for other domestic issues like Inflation and RBIís take on interest rates. Further rise in crude price may act as a dampener.
Vivek Gupta, Director Research, CapitalVia Global Research Limited:
As expected the markets had a good gap up opening. This is an important day for the markets as it has broken the all-time high after it had taken the resistance from the levels of 6357 several times. Technically this is a very bullish indication and market should continue the uprise as both the technical and political aspects are giving positive signals for the economy. A 10-15% is a minimum threshold move which market generally gives further after breaking the levels as important as an all-time high.
Investors should bet on sectors like capital goods, PSU banks which were bitten down but now they are the place where investors will get their money on to ride the bull market. The BJP dominance over the four states is an early indication of what can happen in the deciding round of elections going forward and market would definitely try to discount that before the elections itself.
Considering all aspects an investor should stay invested in the markets with a bullish view point.
Indian shares hit record high as opposition wins state polls
(Reuters) Indian shares rose to a record high on Monday after the main opposition party, widely seen by investors as being more business friendly, swept recent state elections, even as doubts persist about how long the rally can last.
The benchmark BSE index rose more than 2 percent at one point to surpass its previous all-time peak hit on Nov. 3, capping a remarkable turnaround from a few months ago when the country was gripped by its worst market crisis since 1991.
Results on Sunday showed Hindu nationalist Bharatiya Janata Party (BJP) swept three out of four key state elections held since last month, delivering a blow to the ruling Congress Party and bolstering the prospects of opposition prime minister candidate Narendra Modi in national polls due by May next year.
Despite recent policy action by Congress, including moves to attract foreign investments, markets have been clamouring for more measures to bolster an economy growing at its slowest in a decade and to ease infrastructure bottle necks that keep inflation high.
Investors, for now, have concluded that BJP is the most likely to deliver change, analysts said.
"The BJP is considered more right-of-center, pro-business and reform-oriented," Nomura said in a note to clients.
"The fact that runaway spending by the ruling party has not won any votes could be taken as a very positive signal by the markets in terms of voter preference for the kind of policy favoured by the electorate."
The BSE index gained as much as 2.3 percent to a record high of 21,483.74 points, while the NSE index rose as much as 2.5 percent to an all-time high of 6,415.25, surpassing its previous peak hit on January 2008.
Both indexes ended up around 1.6 percent.
Sectors such as infrastructure and construction, seen as most benefitting from a potential BJP victory in elections next year, did especially well.
Builder Larsen & Toubro Ltd, for example, rose 4.1 percent. Lenders, which would benefit from a business cycle recovery, also surged, with ICICI Bank up 5 percent.
(For more individual stock movements click )
Meanwhile, the partially convertible rupee rose to as high as 60.84 to the dollar, its strongest level since Aug. 12, when the currency was headed to a series of record lows.
Still, analysts warned a BJP victory next year is far from guaranteed given it remains a dominant force only in the northern belt where the most recent elections were held. It has struggled to build up its presence in southern and eastern India, despite several attempts.
The market rally could eventually be capped by worries about an economy expected to grow below even the decade low of 5 percent hit in the previous fiscal year.
The Federal Reserve could also move soon to end its massive stimulus after signs of an improving U.S. economy.
Only a few months ago India was badly roiled by fears of an early end to the Fed tapering, ushering the worst market crisis since the balance of payments turmoil two decades ago.
Although India is seen as being in a stronger position after its current account deficit has narrowed to a more than four-year low, the prospect of foreign selling is a concern.
Foreign investors have bought 1 trillion rupees ($16.23 billion) so far this year in shares, making these capital flows vital for India's current account balance.
Furthermore, high inflation has forced the Reserve Bank of India to raise interest rates by half a percentage point over the previous two months. A continued spike in consumer prices in data due out on Thursday could bolster views the central bank will again tighten monetary policy again this month.
"There should not be such excitement around new high. It is not understandable in context of growth and valuations." Sanjeev Prasad, executive director and co-head of Kotak Institutional Equities in Singapore.
($1 = 61.6325 Indian rupees)