Big Modi Win Pushes Indian Equities to Best Week in Seven Months
With the election results now in the books, investors will be looking to see how Narendra Modi tackles a slowing Indian economy.
(Bloomberg) -- Indian equities climbed and key gauges rose to records, capping their best weekly gains in nearly seven months, as Prime Minister Narendra Modi cruised to his second successive victory.
The benchmark S&P BSE Sensex advanced 1.6% to 39,434.72 at the 3:30 p.m. close in Mumbai, taking its weekly gain to 4%, the most since Nov. 2. The NSE Nifty 50 Index also rose by 1.6% to 11,844.10, a new all-time high closing. A measure of price swings, the NSE Volatility Index, plunged another 15% after a 30% slump on Thursday.
With the election outcome settled, investors will be looking to see how the government tackles slowing economic growth. A survey of economists predicts a report next week will show the slowest pace of growth since 2017 in the first three months of this year. Still, the key equity indexes had partially priced the win of Modi’s Bharatiya Janata Party through a more than 11% rally from their lowest closing this year in February.
Strategist View
- “A thumping victory for Modi, surpassing his winning tally of 2014, has pleasantly surprised even the bulls, boosting the risk-on sentiment,” said Jagannadham Thunuguntla, senior vice president and head of research for wealth at Centrum Broking Pvt. in Mumbai. “Post political outcome, the narrative should come back to employment, economy and earnings.”
- A potential interest-rate cut and a possible market-friendly ministerial council could be the next trigger for stocks, Mahesh Nandurkar and Abhinav Sinha, analysts at CLSA India Pvt., wrote in an investor note. “Mid-caps should be back in favor as domestic flows are expected to improve.”
The Numbers
- All the 19 sector indexes compiled by BSE Ltd. gained, led by a gauge of property stocks.
- Twenty-seven of the 31 Sensex members and 44 of the 50 Nifty companies rose.
- ICICI Bank Ltd.’s 5.1% advance to a record was the steepest among Sensex and Nifty members. The lender has gained 20% in 2019.
- Gauges of mid- and small-sized firms compiled by BSE Ltd. climbed more than 2% on Friday.
- Net incomes at 26 of the 41 Nifty companies that have reported earnings so far have either topped or met analyst estimates, according to data compiled by Bloomberg.
Analyst Notes/Market-Related Stories
- Will Modi’s New Term Supercharge India Small-Cap Funds Again?
- Here Are Some Market Winners and Losers From India’s Elections
- Fear No More as India’s VIX Plunges After Modi’s Win: Chart
To contact the reporter on this story: Ameya Karve in Mumbai at akarve@bloomberg.net
To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Margo Towie, Teo Chian Wei
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