A thumping victory for Narendra Modi-led BJP in the Lok Sabha polls, which ushers in prospects of a stable Government at the Centre and economic reforms, electrified the markets with the S&P BSE benchmark Sensex hitting 25,000 mark for the first time ever.
The 30-share index ended higher by a robust 1,128 points – its best weekly gains in nearly two-and-a-half years – on strong buying momentum.
The NSE 50-share Nifty zoomed by a healthy 344.20 points, or 5.02 per cent, to end at 7,203.00 after hitting an all-time high of 7,563.50.
Shares of realty, PSU, power, refinery, metal, banking and consumer durable companies firmed up sharply on hopes that BJP Government would fast-track reforms and accelerate economic activity.
“Markets surely cheered the Modi-led BJP’s win. Major concerns regarding economic recovery, however, remain and necessary actions need to be taken related to reform measures.
The upcoming Union Budget will be keenly watched,” said Rakesh Goyal, Senior Vice-President, Bonanza Portfolio.
IT shares were at the receiving end following a sharp rise in the rupee value against the dollar. In the forex market, the Indian unit climbed to about 11-month high of 58.62 against the US currency.
Sentiments were also boosted on account of strong capital inflows into the equity market. FIIs invested Rs 9,671.82 crore during the week, including the provisional figure of May 16.
The Sensex opened higher at 23,031.11 following exit poll prediction about a BJP-led Government and shot up further to an all-time intra-day high of 25,375.63 after the Lok Sabha election results indicated a clear mandate for Modi.
The key BSE barometer succumbed to bouts of profit- booking, came off the 25,000 mark and ended the week at 24,121.74, showing a sharp gain of 1,127.51 points, or 4.90 per cent.
In the last week of November 2011, the Sensex had flared up by a staggering 1,151.40 points, or 7.34 per cent.
Market participants seemed to ignore data, showing retail inflation rose to three-month high of 8.59 per cent in April, squeezing the space for the Reserve Bank to ease interest rates in the monetary policy review in June.
Dipen Shah, Head- Private Client Group Research, Kotak Securities, said: “We expect new government to take steps to increase public investments and encourage private investments in infrastructure, ensure better governance, reduce fiscal deficit (including control of wasteful subsidies), implement
Jignesh Chaudhary, Head Of Research, Veracity Broking Services said,”The Indian Equity Markets were strongest in the current week with the effect of Bharatiya Janta Party created a record by getting majority on individual basis.
The exit polls were also in the favour of the party the markets responded well with Narendra Modi becoming the next prime minister of the country. Experts are suggesting a bullish trend for the Indian Markets in the coming days so the BSE Sensex is expected to trade in the range of 22,940 to 25,750 and CNX Nifty is expected to trade in range of 6870 to 7620structural reforms like GST, DTC, etc.”
Among the S&P sectoral indices, Realty rose by 13.03 per cent followed by PSU 12.00 per cent, Power 11.86 per cent, Oil&Gas 8.98 per cent, Metal 8.41 per cent, Bankex 8.10 per cent, CD 7.87 per cent and CG 7.32 per cent.
Twenty-four scrips out of the 30-share Sensex ended higher while remaining six finished lower.
Major gainers were BHEL (18.30 per cent),SSLT (17.30 per cent), Tata Power (12.50 per cent), Coal India (12.20 per cent), NTPC (11.40 per cent), SBI (11.10 per cent), ONGC (10.70 per cent), Gail India (10.50 per cent), Maruti Suzuki (9.22 per cent), RIL (8.34 per cent), Hero MotoCorp (8.22 per cent), Axis Bank (7.68 per cent), Icici Bank (6.54 per cent), ITC (6.38 per cent), HDFC Bank (6.27 per cent) and L&T (6.16 per cent), Tata Steel (5.65 per cent) and Tata Motors (5.22 per cent).
Small-cap and Mid-cap indices also shot up by 3.85 per cent and 4.15 per cent on strong buying from retail investors.
The total turnover at BSE and NSE rose sharply to Rs 21,792.18 and Rs 1,13,792.38 crs respectively from the last weekend’s level of Rs 12,721.31 crore and Rs 62,850.48 crore.
Forex: BJP-led NDA government coming into power helped the Indian rupee to rally for the third straight week by 125 paise to close at 11-month high of 58.79 against the Greenback during the truncated week under review.
Sustained dollar selling by exporters and some banks amid increased capital inflows in to record breaking local equities also kept the rupee tempo upbeat, a forex dealer said.
The Forex market was closed on May 14 for “Buddha Purnima”.
Three out of four trading sessions, the rupee appreciated while only on money it closed a tad lower.
The market participants expected the rupee to rise further on the back of hopes of revival of economy after the new government coming into power.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced the week higher at 59.98 a dollar from last weekend’s close of 60.04 and immediately touched a low of 60.12.
Later, it bounced back and remained in positive terrain for the rest of the days to touch a high of 58.62 before settling the week at 58.79, revealing a rise of 125 paise or 2.08 pct. In straight three weeks, it has spurted by 181 paise or 2.99 pct. Previously, it had settled at 58.70 on June 19, 2013.
The Indian benchmark S&P BSE Sensex, after crossing 25K-mark for the first time in the history, closed the week up by 1,127.51 points or 4.90 pct at 24,121.74 while FIIs infused Rs 9,671.82 crore during the week, including provisional data of May 16. .
Pramit Brahmbhatt, Veracity Group CEO said, “Rupee last week broke all the immediate resistance and appreciated over two per cent as the opposition Bharatiya Janata Party and its allies won the country’s elections with a clear majority which has boosted investor’s confidence.
“Rupee continued to trade positively and posted its third weekly gain in a row to trade 11 month high and also registered its best week in eight months. The next major resistance for rupee is at 58.00-mark, near to this level RBI is expected to intervene and also importers are expected to enter in the market. The trading range for the Spot rupee is expected to be within 58.00 to 59.00.”
Forward dollar premiums dropped sharply on fresh receiving by exporters.
The benchmark six-month forward dollar premium payable in October fell back sharply to 202-204 paise from last weekend’s close of 228.5-230.5 paise.
Far-forward contracts maturing in April 2015 also plunged to 418-420 paise from 466.5-468.5 paise.
The RBI fixed the reference rate for the USD at 58.8610 and for the euro at 80.7166 from 60.0540 and 83.0738 respectively.
The rupee strengthened further against the pound sterling to end at 98.79 from last weekend’s close of 101.33 and also shot up against euro to finish at 80.55 from 82.77.
However, it bounced back with a vengeance against the Japanese currency to close at 57.96 per 100 yen from preceding weekend’s close of 59.04.