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The markets are going strong this morning as exit polls unveiled on Monday evening predicted that the Modi-led NDA is set to cross the magic mark of 272 in the just-concluded elections. The Sensex is at 23,858, stronger by 302 points and the Nifty is at 7100, up 85 points. The midcap index is at 7610, up 99 points and the smallcap index is at 7717, up 84 points. All the sectoral indices are in the green, with banking taking the lead. The Bank Nifty is at 14104, up nearly 100 points.
The Sensex had supplemented the 650-points rally on Friday with another 557 points in the previous session to make it an eye-popping 1200+ points gains within two days. The run-up has been driven by hopes of a business-friendly and pre-reform NDA government headed by Narendra Modi assuming charge post May 16. And with the exit polls indicating as much, unless they veer hopelessly off tangent as was the case both in 2004 and 2009, the markets seem headed to stratospheric levels in the days to come.
Foreign institutional investors (FIIs) have been pumping in big bucks into stocks on hopes that the exit polls would show a BJP victory. On Monday, overseas investors put in Rs 1,200 crore into equities, taking their two-day investment tally to nearly Rs 2,500 crore ($420 million), as per provisional figures provided by the stock exchanges.
The counting of votes will take place on Friday, 16 May 2014, and the results are expected on the same day. The term of the current Lok Sabha expires on 1 June and the new House has to be constituted by 31 May.
However, on a cautionary note, the FII data for Monday revealed massive call writing at Nifty 7500 strike levels, which suggests that smart money is betting at a topout at these levels, atleast in the foreseeable future. One would also keep a watch on the VIX, which has tumbled 17% at 30.6 in early trades.
The cues from the global markets are also upbeat this morning. Overnight, the Dow and the S&P 500 ended at record highs on Monday while the Nasdaq rallied as shares of Internet and biotech shares advanced. The Dow Jones gained 112 points to 16,695, the S&P 500 rose 18 points to 1,896 and Nasdaq Composite climbed 71 points to 4,143.
Closer home, the Asian bourses are trading higher tracking overnight gains in the Ubited States. The Nikkei is up 1.6%, Shanghai Composite is up 0.2% and Hang Seng is up 0.3%. However, Straits Times is down 0.9%.
Meanwhile, in an announcement post market hours on Monday, the retail inflation rose to 3-month highs of 8.59% in April, diminishing hopes of a rate cut by the Reserve Bank of India (RBI) in its June 3 review of credit policy. A sharp rise in the prices of vegetables and fruits by 17.5 per cent and 21.73 per cent, respectively, put the consumer price index (CPI) at a three-month high.
The power stocks are running up this morning. Bhel has sky-rocketed by 7.7% at Rs 213 to top the gainers list on the BSE. Tata Power has gained 4.2% at Rs 85 and NTPC has added 4.1% at Rs 126. Index heavyweights such as ONGC, L&T, SBI and RIL are also continuing their recent momentum. ONGC has soared by 3.9% at RS 372, L&T has jumped by 2.2% at Rs 1418, SBI has gained 2.2% at Rs 2294 and RIL has added 1.4% at Rs 1044.
Oil and gas shares are extending their rally for the third day in a row, with ONGC, RIL, Oil India, IOC, HPCL, BPCL and Gail adding 2-6% each on the Bombay Stock Exchange (BSE). ONGC has gained 6% to Rs 380, also its lifetime high on the bourses, while Reliance Industries gained 2% at Rs 1,050 on the BSE. Oil India has surged 5% to Rs 535, followed by Gail India (4% to Rs 400) and BPCL (2% at Rs 513).
The laggards on the BSE are Sun Pharma (down 0.2% at Rs 611) and Dr Reddy's (flat, with a negative bias at Rs 2718).
The market breadth is strong. Out of 1163 stocks traded on the BSE, there are 868 gainers as against 250 losers.
