Markets soar on ‘exit poll’ expectations

Mumbai :  The Sensex, a benchmark index of Indian equities markets, on Tuesday crossed the 24,000-point mark for the first time in its history, recording the third straight high.

At 24,068.94 points, it was the highest mark thus far, surpassing the previous record of 23,573 points recorded on Monday as the exit polls showed the Bharatiya Janata Party and its allies closing in on a majority in the just-ended country’s general elections.

In the last three trading sessions, the Sensex has rallied over 1,500 points and the NSE’s Nifty nearly 450 points. The markets are expected to remain volatile in the run up to the results that will be announced on May 16.

Concerned over the sudden spurt ahead of the poll results, Finance Minister P Chidambaram on Tuesday asked regulators, including SEBI and RBI, to remain alert and take necessary actions to curb excessive volatility.

The nagging fear is that anything short of a decisive victory could spark the worst sell-off in years. There are genuine reasons for these misgivings as exit polls are notorious for making wrong predictions, at least in the two last general elections. Most investors were caught napping in 2004 and 2009 when opinion polls went awry.

Should BJP perform badly and Modi not become prime minister, some analysts predict shares could plunge 8 to 10 per cent in one day, and up to 20 per cent in the aftermath.

 Responding to these fears, RBI Governor Raghuram Rajan said, ‘‘the regulators have examined the financial system over the last few weeks. We have conducted a variety of tests. We are in many ways prepared for any kind of volatility that might emerge over the next few days.”

The 30-scrip Sensex, which crossed the 24,000 points in the morning session, opened Tuesday’s trade at 23,729.78 points, and ended trade at 23,871.23 points, a record closing high, up 320.23 points, or 1.36 percent, from the previous day’s close at 23,551 points.

The Sensex touched a high of 24,068.94 points and a low of 23,729.25 points intra-day.

“The exit polls, which predicted a victory for the BJP-led NDA, gave further fillip to the markets as they closed at a new record,” said Dipen Shah, head – private client group research, Kotak Securities.

“Expectations are now of a stable government at the centre and that has raised hopes of better growth for the economy. The markets have risen based largely on these expectations,” he added. The rally was led by the capital goods, oil and gas, information technology (IT), consumer durables and technology, entertainment and media (TECK) sectors.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) too closed at a record high. It surged 94.50 points or 1.35 percent and closed at 7,108.75 points after climbing to an all time high of 7,172.35 points.

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