The financial markets touched new highs yet again as participants started the day on the assumption the new government would
be headed by the BJP and its alliance that could put the country's economy back on the fast-track.
Equities opened with a massive gap-up on hopes the BJP alliance could win higher than the exit poll forecast of 272 seats. The NSE Nifty opened 147 points higher while the BSE Sensex started with a 366-point gap.
The Sensex hit an intraday high of 1,470 points, at 25375.63 while the NSE rose 440 points, to 7563 when the counting started showing signs of BJP alone grabbing 272 seats.
The markets began to book profits after it was clear that the new prime minister would be Narendra Modi. Most Gujarat-based companies appreciated sharply between 5% and 19% in intraday trades.
Rupee gained grounds after foreign investors turned aggressive buyers of equities. They bought ₹ 3,634 crore worth of stocks on Friday, while domestic institutions were net sellers to the tune of ₹ 349.32 crore, the provisional exchange data said. The rupee opened firmer from the previous close of ₹ 59.29 to the dollar at 58.96 and hit a high of 58.62 before ending at 58.78.
"The rupee opened strong following a powerful surge with which equity markets opened up. But as stocks witnessed profit-taking, we saw import covering and some demand from government banks propping up the rupee," said K Harihar, head treasury, FirstRand Bank.
Bond yields, too, firmed up from its opening. The ten-year yields rose from the opening level of 8.70% to 8.83% at close, indicating inflation could pressure interest rates in the near term, said a dealer.
Most participants felt the equity markets have now factored in the BJP win and the next trigger would depend upon the policies of the new government on growth.
"The results are well digested, the next move will stem from what the new government policies are," said UR Bhat, managing director, India of UK-based Dalton Strategic Partnership LLP, a foreign institutional investor.
Overall, the market sentiment is expected to remain buoyant. "The markets have been on a high for the past one month. What we saw today was 'sell on news and buy on rumours'. There will be a pause for now before the bull run resumes," said Parag Parikh, chairman, PP Financial and Advisory Services.
Despite the profit-taking, the NSE Nifty closed higher by 79.85 or 1.12% up at 7203 while the BSE Sensex ended 216 points higher or 0.90% to 24121.74.
The NSE trades were the highest in history with turnover in equity derivatives being ₹ 436, 884 crores. The turnover in the Index Futures clocked ₹ 52,135 crore and in the Index Options, at ₹ 314,275 crore.
Of the 50 stocks on the Nifty, 36 advanced while 14 declined. Sesa Sterlite ended with a gain of 11.05% at ₹ 215, Punjab National Bank at 8.16% (₹ 924.95), BPCL 551.70 (6.85%), DLF 6.50% (₹ 170.35) and State Bank 5.95% (₹ 2414.95).
A few Gujarat-based volatile stocks were Ganesh Housing 18.91% (closed ₹ 154.55 or 13.72%), Gujarat Natural Resources 18.79% (₹ 160 or 11.54%), Adani Enterprises 16.87% (₹ 530.90 or 6.06%), Adani Power 8.28% (₹ 55.65 or 1.27%), Adani Ports 6.83% (₹ 224.65 or 1.95%), United Phosphorous 8.07% (₹ 283.60 or 4.46%), ABG Shipyard 8.02% (234.65 or 6.9%) and Welspun 6.69% (₹ 124.25 or 1.97%).
Going by the record trades on the NSE, it doesn't appear, bulls have disappeared, said a market watcher. "The outlook is positive and investors are optimistic," said Nirmal Jain, chairman at India Infoline Ltd.
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