Sensex at new high; rupee at 11-month peak

The stock markets and the rupee welcomed the crowning of Narendra Modi as India’s 14th Prime Minister by opening Friday’s trading session at a significant high.

Immediately after opening, the Nifty and the Sensex spiralled and breached the 7,500 and the 25,000 levels, respectively, while the rupee strengthened to an 11-month high against the dollar as news of the BJP gaining a majority trickled in.

“The win comes at a time when India needs a stable, pro-development and decisive government. It is apparent that such a result has increased the confidence in the country’s future prospects, with the S&P BSE Sensex crossing the 25,000-mark,” said Ashishkumar Chauhan, MD and CEO of the BSE.The second half saw sustained profit booking settling the indices while adding over ₹1.12-lakh crore to investor wealth.

The Nifty opened 147 points up at 7,270 before touching an intra-day high of 7,564 and finally closing at 7,203, up 1.12 per cent. The NSE recorded its highest notional turnover in equity derivatives (₹4,36,884 crore) and highest number of trades in the cash market (1,18,05,386).

The Sensex opened 366 points up at 24,272, zoomed to an all-time intra-day high of 25,376 (1,470 points over Thursday’s close) and finally closed at 24,122, up 0.9 per cent.

Commenting on the poll results, Navneet Munot, Chief Investment Officer at SBI Mutual Fund, said: “Given the BJP’s manifesto and Modi’s track record, India can be expected to leap-frog in building physical and social infrastructure using innovative technology.”

Foreign institutional investors bought net equities worth ₹3,635 crore while domestic institutional investors offloaded equities worth ₹349 crore.

Rupee appreciates

The rupee closed at ₹58.83 to the dollar, up 25 paise over its previous close.

“Formation of a stable government will help in improving sentiment and result in foreign capital inflows. However, over a three month period, volatility in the rupee is likely to subside and the focus will shift to the evolving macro economic fundamentals,” said TC Guruprasad, Managing Director, CentrumDirect.

Retail investors on the BSE also sold net equities to the tune of ₹739 crore. Barring IT, consumer durables and FMCG, all the broader and sectoral indices closed in the green.

Volatility was down 33.92 per cent and the volatility index India Vix closed at 24.2925.

“With a strong mandate, we believe India’s growth story will remain strong, at least in the next few months. The path to strong long-term economic growth implies some pain in the interim, especially given the fiscal consolidation imperative and inflation moderation target,” said Gautam Chhaochharia of UBS Securities.