BSE Sensex rises to record closing high on Modi hopes

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex and the broader Nifty hit a record closing high on Monday as investors continued to switch to stocks with a domestic focus, such as NTPC, on hopes the new government to be led by Narendra Modi would spur major economic reforms.

However, broader gains were capped as exporters lost heavily after the rupee strengthened to an eleven-month high against the dollar, sending IT outsources and drug makers sharply lower.

The victory of the Bharatiya Janata Party and its prime minister candidate, Narendra Modi, has spurred optimism the new government would kickstart an economy growing at its slowest in a decade and led a slew of banks including Goldman Sachs and Citigroup to sharply raise their forecasts for the Sensex and Nifty.

 

Foreign investors have remained strong buyers in the rally. On Friday, the day of the election results, they bought shares worth a net 36.34 billion rupees ($615.6 million), their biggest single-day purchase since March 21, provisional exchange data showed.

"A stable and decisive government can re-engineer the Indian growth story by spear-heading structural reforms going ahead, and thus increasing foreign investors' interest in India," said Nirakar Pradhan, chief investment officer at Future Generali India Life Insurance.

The benchmark BSE Sensex rose 1 percent, or 241.31 points, to end at 24,363.05, a record closing high but still well below the all-time high of 25,375.63 hit on Friday.

The broader Nifty rose 0.84 percent, or 60.55 points, to end at 7,263.55, also a record closing high, after hitting an all-time high of 7,563.50 in the previous session.

Domestic-focused shares continued to lead the rally. NTPC surged 10.6 percent, while Oil and Natural Gas Corp ended 8.5 percent higher.

Tata Power Co Ltd rose 7.5 percent while Larsen & Toubro Ltd gained 6.8 percent.

The NSE sub-index for lenders rose 2.5 percent to a record closing high. Punjab National Bank surged 10.5 percent while State Bank of India jumped 6.2 percent.

Also, NSE midcap index ended 4.4 percent higher after earlier rising to a record high, helped by a 16.8 percent surge in Reliance Infrastructure and a 14.3 percent jump in Power Finance Corp .

However, exporters, who had led a rally late last year and early this year, slumped after the rupee hit its strongest in eleven months against the dollar.

Tata Consultancy Services slumped 5.7 percent, and HCL Technologies lost 4.2 percent, Infosys INFY.NS ended down 5.1 percent, while Wipro fell 4.1 percent.

IT stocks also slumped amid heavy selling by domestic mutual funds, three institutional dealers told Reuters, although they said the state-run Life Insurance Corp (LIC) had stepped in to buy to prevent even bigger falls.

LIC did not respond to email or phone queries.

Dr.Reddy's Laboratories fell 5 percent while Lupin lost 4.6 percent.

(Editing by Anupama Dwivedi)