By Bharath Rajeswaran and Ankur Banerjee | June 3, 2024 | 7:55 PM GMT+5:30
Indian stock markets soared to unprecedented heights on Monday, buoyed by exit polls suggesting Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) will achieve a decisive victory in the 2024 general elections. The Nifty index closed at 23,263.90 points, up 3.25%, while the BSE index ended at 76,468.78 points, marking the best daily gains in 40 months. Both indexes have nearly doubled in value since the last election in 2019.
Market Reactions and Economic Indicators
The rupee experienced its best single-day gain in over five months, closing at 83.1425 against the dollar, while the 10-year government bond yield dropped to 6.9438%, its lowest since April 2022. The financial markets were optimistic about continued economic growth and political stability under Modi's leadership.
Investors are enthusiastic about Modi’s anticipated third term, expecting it to bring sustained economic reforms and development. Ajit Mishra of Religare Broking noted that the market might further rally if the Nifty index surpasses the 23,400 mark.
Investor Sentiment and Foreign Investments
The expectation of a stable and reform-oriented government has prompted a surge in investor confidence. Foreign investors, who injected a net $20.7 billion into Indian equities last year, are anticipated to increase their investments following the election results. Vikram Kasat of Prabhudas Lilladher advised investors to remain optimistic and capitalize on market opportunities, dubbing the current sentiment as "ride the wave."
Political Continuity and Economic Growth
India’s GDP growth accelerated to 8.2% for the fiscal year ending March 2024, driven by government spending on infrastructure and a booming real estate market. Analysts predict that a strong BJP victory will enable Modi to implement tougher land and labor reforms, bolstering the country’s economic landscape.
Future Outlook
Investors expect Modi’s administration to focus on transforming India into a manufacturing hub, attracting foreign giants like Apple and Tesla to diversify their production capabilities beyond China. This anticipated political continuity is seen as a catalyst for further economic development and infrastructure investments.
As India awaits the official election results, markets are expected to remain volatile. However, the current trajectory indicates strong investor confidence in Modi’s leadership and the country's economic prospects