Indian markets hit record highs on Monday as experts predicted a resounding victory for incumbent Prime Minister Narendra Modi in national elections.
India’s benchmark Sensex index, which tracks 30 large companies, and the broader Nifty 50 index each jumped over 3% in early trade.
The surge comes after India concluded its mammoth, weeks-long election this weekend.
“I can say with confidence that the people of India have voted in record numbers to reelect the … government,” Modi said on X on Saturday, shortly after polls closed.
The 73-year-old ran on his economic record over the past 10 years, a period of robust growth for India.
Results will be declared on Tuesday. In India’s last election in 2019, Modi’s party won 303 seats in parliament. Analysts cited multiple local exit polls that point to a much bigger Modi victory this time as the major reason for the market optimism.
“With the exit polls pointing towards 370 seats mark and ahead of street expectations of 320-350 seats, markets have reacted positively,” said Manish Chowdhury, head of research at brokerage StoxBox.
“We expect to see higher flows both from domestic as well as foreign investors going ahead,” he added.
The surge in stocks also comes after the country posted bumper economic growth numbers on Friday. The economy expanded by more than 8% in the fiscal year that ended in March, cementing India’s status as the world’s fastest growing major economy.
The country is comfortably placed to expand at an annual rate of at least 6% in the coming few years, but analysts say it needs to achieve growth of 8% or more if it wants to become an economic superpower.
Investors hope that if Modi wins a big majority in parliament, his government will unleash key land and labor reforms needed for the next phase of growth.
Sustained expansion will push India higher up the ranks of the world’s biggest economies, with some observers forecasting the country to become number three behind only the United States and China by 2027.
Shares in ports-to-power conglomerate Adani Group also surged on Monday. Adani Enterprises, the group’s flagship firm was up almost 7%, while Adani Power was up nearly 16%.
Last week, its founder Gautam Adani overtook fellow countryman Mukesh Ambani, the chairman of Reliance Industries, to become Asia’s richest man once again, according to the Bloomberg Billionaires Index.
Both Ambani and Adani are considered vocal champions of Modi. Adani’s rising fortunes come a year and half after his group was rocked by an unprecedented crisis when an American short-seller Hindenburg Research accused it of engaging in fraud over decades.
Adani denounced Hindenburg’s report as “baseless” and “malicious.”
Since then, the tycoon has made a remarkable comeback, with shares in some of his companies touching record highs as investors cheer his ability to adroitly bet on sectors prioritized for development by Modi.
The country’s stock markets have performed well during his tenure. The value of companies listed on India’s exchanges surpassed $4 trillion late last year. Earlier this year, the National Stock Exchange of India (NSE) overtook both the Shenzhen Stock Exchange and the Hong Kong Exchange to become the world’s sixth largest bourse, data from the World Federation of Exchanges showed.
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