India M-cap Hits ₹426 Lakh Crore as Shares Surge to Record Highs

Indian stocks surged to new record highs, the rupee strengthened, and bond yields dropped to their lowest level in two years on Monday. Investors were optimistic about the Bharatiya Janata Party (BJP) potentially winning a strong majority in the upcoming elections, based on exit poll results. The benchmark indices saw their biggest single-day gains in four years, with the Volatility Index (VIX) dropping significantly.

The continuation of this positive momentum in the coming days will depend on the actual election results matching the exit poll predictions. Analysts caution that if the results differ, there might be a brief reversal in the market. However, a clearer victory for the BJP could lead to further gains.

Market Performance

The Nifty index surged by 3.25%, while the Sensex gained 3.39%, both marking their largest single-day rallies since February 2021. India’s market capitalization increased by ₹13.78 lakh crore to reach ₹425.92 lakh crore on Monday.

Foreign investors showed renewed interest, purchasing shares worth ₹6,851 crore, partly covering their bearish derivative positions built before the exit polls. This liquidation of bearish bets contributed to the market rally.

Economic Outlook

Investors are hopeful that a BJP-led government will continue current economic policies and implement market-friendly reforms, such as land and labor reforms, to boost India’s manufacturing sector.

The rupee strengthened against the dollar, and bond yields dropped to 6.94%, the lowest since April 7, 2022. In equities, the exit poll results alleviated concerns, with the broader market also ending on a positive note.

Market experts anticipate further gains if the election outcome aligns with the exit poll predictions. However, they also stress the importance of the upcoming budget announcement as a key market trigger.