Mumbai, Dec 5 (): BJP’s expected win sent stock markets and the rupee on a tizzy on Thursday, reaching its highest level against the dollar since November 5 as exit polls predicted a strong comeback for the BJP in state elections.
On Sunday, results for five state elections are due. If a strong showing by the BJP has seen the results, stock markets’ feel would increase the chances of victory in general elections due in May, according to analysts. BJP is seen by many investors as more business-friendly.
However, opinion and exit polls have botched it up before in India. Most exit poll surveys forecast the wrong outcome for the 2004 general elections.
The rupee jumped to 61.75 against the dollar. It was last trading at 61.76/77 compared to its close yesterday at 62.05/06. The BSE Sensex shot up by as much as 455 points or 2.2 per cent up on Thursday after exit polls predicted the BJP to emerge as the biggest winner in four state elections.
The 50-share Nifty was up by 40 points to hit the 6,300 levels, while the rupee also moved up to 61.70 per dollar. ICICI Bank was the top gainer, up 5.5 per cent, and HDFC Bank rose over 4 per cent. Capital goods and infra stocks also saw buying interest. L&T, India’s biggest infra company gained 3.5%.
The market was expecting BJP to do well. Stock markets feel that in six months’ time, the inflation is not controlled and RBI loosens controls on liquidity, BJP and Modi will come to power.
The CAD has been brought under control and only inflation worries remain for RBI. India Inc has been rooting for Modi whom they see as very decisive and efficient. If he brings in the Gujarat model in Delhi, economy is expected to surge.
Most of the infra projects are waiting for clearance for years together. A debate on the economy has been called for by Left in the Parliament. The curbing of CAD by regulating gold imports has worked to bring relief.