Sensex, Nifty hit record highs as exit polls favor Modi

Stocks rose to a record high on Monday after most exit polls released over the weekend showed Prime Minister Narendra Modi returning to power for a third consecutive term.

The benchmark Sensex and Nifty indices each surged about 3.3% on Monday to record highs of 76,468.78 and 23,263.90. Votes will be counted on Tuesday.

Stocks of Adani group firms as well as companies run by billionaire Mukesh Ambani surged, with Adani Power stock jumping as much as 18% and Reliance Industries climbing 4%.

Gautam Adani had over the weekend overtaken Ambani as the richest Asian, with a net worth of $111 billion against Ambani’s $109 billion, according to the Bloomberg Billionaires Index, a daily ranking of the world’s richest people.

Adani is currently the world’s 11th richest person, followed by Ambani at 12th spot.

Shares of infrastructure-linked firms and state-run companies rallied as investors see a Modi victory as a strong signal to boost economic growth through increased capital expenditures.

The rally in equities was led by state-run companies such as NTPC Ltd and Power Grid Corp. Ltd.

The S&P BSE PSU index rose about 7.67%, while an index of capital goods firms rose about 5.23%.

Shares of India’s largest public sector bank, State Bank of India, surged by 9.8% to hit an all-time peak of ₹911.30 apiece, pushing the lender’s market capitalization beyond ₹8 trillion, making it the first PSU and the fourth listed firm to reach the milestone.

The general election stretched over six weeks, with low voter turnout in the initial phases spooking investors and the ruling party alike.

However, following the exit polls, the NSE’s India Volatility Index, or the fear index that tracks 30-day implied market swings based on options pricing, sank 22%, setting it on track to end at its lowest in more than three weeks after doubling since late April.

The Indian rupee and bonds also surged on Monday.

The rally in equities, bonds, and the domestic currency also followed the release of favorable macroeconomic data over the weekend.

Government estimates showed India’s economy grew by a higher-than-expected 8.2% in fiscal 2024. The government’s fiscal deficit for FY24 was recorded at 5.6% of gross domestic product (GDP), lower than the revised estimate of 5.8%, contributing to the rally in bond prices.

To be sure, GDP growth in the January-to-March quarter eased to a four-quarter low of 7.8%. India grew at 8.6% in the October-to-December quarter, government data showed.

Goods and services tax collections rose 10% in the month of May to ₹1.73 trillion, government data showed.

The seasonal Southwest Monsoon also made landfall on Thursday, 30 May, arriving a couple of days ahead of its usual 1 June start.

The monsoon season, which accounts for three-fourths of the country’s annual rainfall every year, is expected to deliver about 102% of the long period average (LPA) of 868.6 mm, according to private weather forecaster Skymet.