Investing.com – India’s benchmark index futures rose nearly 3% in morning trade on Monday after a series of exit polls over the weekend showed incumbent Prime Minister Narendra Modi set for a third straight term.
By 10:03 pm ET (0203 GMT), the index had jumped 2.8% to a record high of 23,377.0.
Several exit polls released over the weekend showed that the Bharatiya Janata Party (BJP)-led NDA alliance was largely set to win the 2024 general elections, which ended on June 1.
Exit polls also showed that the NDA alliance is likely to reach the much-touted milestone of 400 seats in the lower house of the Lok Sabha. While exit polls have a dubious history of over- or under-reporting election results, they have so far been successful in predicting broader trends in Indian elections.
The victory under a non-disclosure agreement represents a third term for incumbent Prime Minister Narendra Modi, who has been largely at the center of the BJP’s election campaign. Official election results are scheduled to be announced on June 4.
Investors have generally welcomed Modi’s pro-business policies, especially as India has become the world’s fastest-growing major economy over the past two years. This excessive growth will continue in the current fiscal year despite headwinds of high unemployment and inflation, as well as high and long-term interest rates.
The Nifty 50 index also hit a series of all-time highs in optimism about the Indian economy, which has attracted scores of foreign investors over the past two years.
Manufacturing and infrastructure stocks are likely to benefit from Modi’s victory, given that the government has focused most of its efforts on these two sectors over the past two years.
However, CLSA analysts warned in a recent note that the rally in Indian equities following the BJP victory has limited room to build and that the Nifty could see a sharp pullback in the next few weeks.