Mumbai: India’s benchmark Sensex and Nifty indices cheered after most of the exit polls suggested a clear majority win for Bharatiya Janata Party (BJP) in both Gujarat as well as Himachal Pradesh assembly elections.
In early trade, the Sensex rallied 1.13%, or 375.26 points, at 33,621.96, while the 50-share index Nifty was at 10,373.10, up 1.18%. In the year so far, Indian equity markets have jumped around 27% riding on the wave of liquidity.
“A potentially convincing win for the BJP in Gujarat—a state perceived to be the most impacted by the GST (goods and services tax) and demonetisation—will boost market sentiment,” said CLSA report in a note to its investors.
Most exit polls have predicted a simple majority for the BJP with over 100 seats in Gujarat with one exit poll predicting two-third majority, while in Himachal Pradesh all three exit polls have predicted two-third majority for the BJP with 47-66 seats. The predictions, if they come true on Monday, will boost BJP numbers in the Rajya Sabha, the upper house of Parliament.
According to Kotak Institutional Equities, a victory for the BJP will be received well by the market, while a surprise defeat (against the forecasts of the exit polls) would be a large negative surprise for the market. “In the former case, we see a modest rally and in the latter, a moderate correction as the market will also start focusing on India’s weakening macro position,” the firm said in a note on 15 December.
All the BSE sectoral indices gained. BSE Metal was the top gainer, up 2.5% followed by BSE Capital Goods and Realty which were up 1.5% each.
Among the gainers, HDFC Bank Ltd was up 2.5% after it said its board will meet on 20 December to consider fund raising. Bajaj Auto Ltd climbed 2.2%, while Adani Ports and Special Economic Zone Ltd advanced 2.1%.