Stocks, rupee rally on exit polls

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Stocks, rupee rally on exit polls

Published: Mon 20 May 2019, 7:33 PM

Last updated: Mon 20 May 2019, 9:38 PM

Indian stocks and currency recorded significant gains on Monday, reflecting a strong rebound in global investor confidence as Sunday's exit polls suggested a landslide win for Prime Minister Narendra Modi's coalition.
As shares soared 3.75 per cent in what was the biggest one-day jump in nearly six years, the rupee surged 79 paise to 69.44 against the dollar or to 18.92 against the dirham, up 3.69 from 19.13 on Friday.
The Bombay Stock Exchange's Sensex index ended at a record high 39,352 points and the NSE Nifty surged 421 points as analysts endorsed the most likely five-year second term for a Modi-led government as a critical boost to the world's fastest growing major economy.
Analysts believe that by retaining power, Modi regime will ensure a continuation in reforms and policies initiated during its first term. A continuation of policies and reforms will reignite investor confidence and enable businesses and traders to carry on with their expansion or investment plans without any fear of uncertainty, they said.
Sajith Kumar PK, CEO and managing director, IBMC Financial Professionals Group, said stock markets were a key supportive factor for the rupee rally on Monday.
"Sensex and Nifty posted their biggest one-day gain in six years after exit polls showed that the BJP-led NDA getting a big majority in Lok Sabha elections. Sensex closed with 3.7 per cent gains and Nifty closed with 3.69 per cent gains on Monday and both were at near record high. Even last week, when the dollar was getting stronger against all currencies internationally, the rupee remained stable thanks to the intervention of Reserve Bank of India and the support of domestic investors to local equity markets," he said.
Pradeep Unni, head of Strategic Business Development, Richcomm Global Services DMCC, said equity markets and the Indian currency reveled with a higher opening on Monday, confident that the current government policies will continue uninterrupted for the next five years.
"More than anything else, India at this stage needs a stable government. Foreign fund flows, and more importantly, domestic investor interest in the equity market, will definitely see a boost over the next few weeks. The rupee could well appreciate further and move closer to 68 per dollar-mark going forward. Indian rupee futures & options on the Dubai Gold & Commodity Exchange saw a massive volume surge on Monday indicating that investors are racing ahead to hedge their currency risk," said Unni.
Global funds bought a net Rs17.3 billion worth of shares on Monday, according to provisional data from the exchanges. "That would obstruction to a further appreciation of equity markets and the rupee is the surging oil price and its negative impact on India's trade deficit. Markets can expect some profit taking as we head towards the actual result on Thursday," added Unni.
Kumar said equities jumped on the assumption that Modi government's continuation will be more supportive for international Investors. "If the current momentum continues, Sensex and Nifty may surge to record highs during this week while rupee can touch 69 level against the dollar," he said.
Top gainers in the Sensex pack include SBI, IndusInd Bank, Tata Motors, L&T, Yes Bank, HDFC, M&M, Maruti, ONGC, RIL, ICICI Bank and Axis Bank, rising up to 8.64 per cent.
A majority of exit polls on Sunday forecast another term for Modi, with some of them projecting that the BJP-led NDA alliance will get more than 300 seats to comfortably cross the majority mark of 272 in the Lok Sabha. The results of the seven-phase polls will be announced on May 23.
- issacjohn@khaleejtimes.com

by

Issac John

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