Indian stocks hit a record high on Monday, after several days of selling. This was because exit polls showed that Prime Minister Narendra Modi’s Bharatiya Janata Party would win the election.
Dow Jones Market Data says that India’s BSE Sensex IN:1 rose 3.4% to 76,533, and it’s on track to close at a record high. That beat last week’s record of over 75,000. The Sensex had been going down for five days in a row.
INR 83.12, which is almost 0.4% less than the dollar (USDINR, -0.35%).
The general election in the country ended on Saturday, and the official counting starts on Tuesday. But major news networks said Modi and his BJP party would win a third term by beating a broad alliance of opposition parties, as reported by the Associated Press. It was predicted that the BJP and its allies would win more than 350 of the 543 seats, which is more than enough to form a government.
The iShares MSCI India ETF (INDA) and the WisdomTree India Earnings Fund (EPI) were both up about 3% before the market opened.
In India, where fast economic growth has put millions of people into the middle class in recent years, options bets have been going through the roof. These bets also pointed to a win for Modi’s party. The Indian stock market hasn’t lost money since 2015; in that time, it’s had five years of double-digit gains.
Deutsche Bank’s Kaushik Das told clients on Monday that India would continue to be a growth leader with at least 6.5% real GDP growth and 10–11% nominal growth over the next few years.
But analysts at Jefferies have recently warned about the huge $7 billion a month inflows of domestic equity that have been seen so far in 2024.
“At about 20% of financial savings and “predictable” flows to equity at less than half, the risk of a change in the domestic flow is rising.” “A possible action by regulators on derivatives could be a trigger,” a group led by Mahesh Nandurkar wrote in a recent note.
Nandurkar and his team wrote in a separate note on Sunday that a second Modi victory could still be good for some stocks that have been behind the overall index.
“Private capital expenditures are on the rise again, and the stability of politics makes us like long-term capex plays in real estate, industrials, and power.” But, because domestic investors are already very invested, they warned, “a tactical breather is likely.”
