Stock markets shot up on Monday, as exit polls predict Bharatiya Janata Party (BJP) getting a clear mandate in the recently concluded 2019 Lok Sabha Elections.
Both Sensex and Nifty50 rose considerably on Monday. Sensex jumped a whopping 1,421.90 points and closed at 39,352.67 points, while Nifty50 gained 421.1 points and closed at 11,828.25 points. Nifty50 recorded its highest single-day gain in 10 years and is just short of its all-time high of 11,856 points.
Notable stocks that shot up are ICICI Bank, HDFC Bank, DCB Bank, Bajaj Finance and Titan. The exit polls have their effect on Dollar-Rupee as well. The Indian National Rupee touched its two-week high at Rs 69.74 against the US Dollar.
This surge in stock markets can be compared to that of 2009’s when the United Progressive Alliance (UPA) won the Lok Sabha elections comfortably, and Manmohan Singh became the Prime Minister of India. On May 18th 2009, the BSE Sensex jumped massively by 2,110.79 points to close at 14,272.63 points, while NSE Nifty50 shot up 636.40 points to close at 4,308.05 points.
On Monday, the market capitalization of BSE listed stocks touched Rs 1,51,82,862.33 crore. Many BSE listed stocks recorded their 52 week’ high, and at the same time, more than 100 stocks recorded their one year low. Industry experts feel that if the actual verdict is different, then stocks would take a massive beating.
Exit polls are not always right. The 2004 Lok Sabha exit polls predicted NDA retaining power, but UPA got the mandate. Considering that, it’s advisable that you don’t make decisions based purely on the exit polls unless you are ready to bear some risk.
If NDA retains power, then the Indian market is expected to be independent of the global market for a period of 2 weeks – a good time for the short term investors to place their bets. Stock markets have seen a dip in consumers due to the Lok Sabha elections, and we could see a steep rise if a stable Government is formed.
NSE’s Nifty50 is expected to perform even better if the exit polls turn out to match the actual verdict. This could be due to the Government’s mission of addressing and solving agricultural concerns.
If the exit polls are right, then stocks of the auto companies would benefit the most. Cement stocks are doing well, and they would be bolstered if NDA retains power. Real estate too may benefit with the re-election of Modi at the helm of things.
The outcome of the May 23rd is going to play a massive role in what is going to happen in the Indian stock markets. If the exit polls match the actual verdict, then we can expect markets to perform even better.
Engineer by qualification, financial writer by choice. I am always open to learning new things.