Sensex, Nifty surge, but shed some of their gains

The exit poll projections that the Bharatiya Janata Party (BJP) could win in four of the five states where Assembly elections concluded on Wednesday came as a shot in the arm for Indian shares and the rupee on Thursday. Foreign institutional investors (FIIs) boosted purchase of local shares, while NSE’s volatility index (VIX), a measure for the market’s perception of near-term risks, plunged on hopes BJP would turn out to be the winner when the actual poll results were announced on Sunday.

The benchmark indices, however, could not hold on to early gains, as investors and traders booked profits, judging that the recent gains were excessive. Weakness in other Asian markets ahead of US labour report also put a lid on stock gains in India.

“Markets have already factored in a BJP victory in the state elections. So, once the actual election results are out, the reaction could be moderate and there could also be some profit booking,” said Motilal Oswal Financial Services Chairman Motilal Oswal.

BSE’s Sensex rose 249.10 points, or 1.20 per cent, over its previous close to end at 20,957.81, off the day’s high of 21,165.60. NSE’s Nifty gained 80.15 points, or 1.30 per cent, to close the day at 6,241.10, after touching a high of 6,300.55. Banking, real estate and capital goods stocks led the upside.

FIIs net-bought shares worth Rs 1,151.51 crore on Thursday, while their domestic peers sold to the tune of Rs 674.02 crore, according to provisional data. Buying by overseas investors was the highest since November 14.

VIX plunged 8.6 per cent to 21.68, as exit polls the previous evening alleviated uncertainty surrounding the state elections. Market participants are interpreting the exit polls’ results as an indication that the BJP wave, under its PM candidate Narendra Modi, is gaining momentum across the country.

Source: Business Standard

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