The Telegraph
Tuesday , May 13 , 2014
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Merry-making masks worry lines
Nifty, Sensex scale new peak

Mumbai, May 12: The Nifty and Sensex surged to their second consecutive record highs on Monday on rising hopes that the BJP and its allies would win a majority in the elections.

The Sensex closed at 23551, a gain of 2.42 per cent (or 556.77 points), while the Nifty ended at 7014.25, an increase of 2.27 per cent (155.45 points). Intra-day, the Sensex rallied to an all-time high of 23572.88 and the Nifty touched a record 7020.05.

A win for a BJP-led coalition is widely seen as setting the stage for a revival in confidence, investment and growth as Asia’s third-largest economy steers through a rough patch. Both the Sensex and the Nifty have surged more than 19 per cent since Narendra Modi was named the BJP’s prime ministerial candidate on September 13.

“Markets got a wind of the exit polls showing a clear majority for the BJP-led allies, which got extrapolated as better growth prospects for India,” said Deven Choksey, managing director at KR Choksey Securities.

Though the rally so far had been largely fuelled by large cap stocks, it could be the turn of the mid-cap counters to shine in the days to come.

Market experts feel that if the poll results are to show the NDA forming a government at the Centre, investor attention could shift to mid-cap stocks as these had largely stayed out of the recent upsurge in share prices that had seen the Sensex rise 1200 points in two sessions alone.

“Such a movement (of the markets) in frontline and index stocks is increasing the valuation gap between mid-size and frontline stocks. If the outcome of polls comes according to expectations, we can expect massive buying in mid-cap stocks,” Shrikant Chouhan, head — technical research, Kotak Securities, said.

Results of exit polls later confirmed the optimism in the markets. The exit polls showed the NDA getting anywhere between 249 seats and 280 seats.

Opinions are, however, divided on how stocks will react to these predictions tomorrow. While a section feel that stocks can continue to score gains, there are others who say profit booking may come in.

“We expect Nifty to open gap-up in tomorrow’s trade and gain by 3-4 per cent to around 7300 before the election results on May 16,’’ J. K. Jain, head of research, Karvy Stock Broking, said.

The rupee today rose to a nearly 10-month high of 59.51 against the dollar but frittered away the gains to end one paise down at 60.05 on late demand of the dollar.

Meanwhile, investors and market authorities are keeping a close watch on the bourses to guard against excessive volatility. Market authorities are working to ring-fence the systems and infrastructure from any sudden volatility on the results day as well as the days close by. The movements in stocks on May 16 and May 19 would be under special watch, sources said.