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After Exit Polls, Sensex Breaches 24,000, Nifty At New High
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The BSE Sensex rose on Tuesday (13 May) to a third consecutive record high, surpassing the key psychological level of 24,000 points as stocks tied to the domestic economy surged after exit polls showed the Bharatiya Janata Party (BJP) and its allies winning a majority in the elections.
The BSE Sensex rose as much as 2.2 per cent to hit a life high of 24,068.94, while the broader Nifty rose as much as 2.3 per cent to hit a record high of 7,172.35.
Narendra Modi is set to become India's next prime minister when actual results are out on Friday, with his coalition broadly tipped to grab the 272 seats needed to clinch a majority, four major exit polls showed on Monday.
Still, exit polls by media organisations have proven unreliable in the past, while doubts have started emerging over whether markets have run ahead of fundamentals as election optimism overshadows issues like tepid earnings growth, fiscal deficit and sticky inflation.
"While the long-term uptrend remains intact, the market looks a bit stretched as it has discounted 260-270 seats for NDA now, so a rally would extend only if we get a positive surprise of say 300 seats," said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance.
"The market had wind of exit polls' results and therefore had run nearly 5 per cent in two days before that."
The BSE Sensex ended up 1.36 per cent at 23,871.23, while the Nifty ended 1.35 per cent higher at 7,108.75, adding to their over 4 percent gains in the previous two sessions.
Shares of companies tied to the domestic economy led the gains. Bharat Heavy Electricals Ltd jumped 10.2 per cent, while Oil and Natural Gas Corp Ltd rose 3.9 per cent.
Larsen & Toubro Ltd rose 1.6 per cent, while mortgage lender Housing Development Finance Corp ended 1.2 per cent higher.
The NSE bank sub-index ended 0.6 per cent higher after earlier hitting a record high at 14,367.75.
State Bank of India Ltd gained 1.5 per cent, while Bank of Baroda Ltd rose 4.5 per cent.
Among other domestic-oriented stocks, Ambuja Cements Ltd surged 4.8 per cent, and Tata Power Co Ltd rose 3.7 per cent.
However, Dr Reddy's Laboratories Ltd, India's second-largest drugmaker by sales, slumped 4.1 per cent after its quarterly net profit fell short of analyst estimates due to a rise in expenses.
Investors added to bets that Bharatiya Janata Party's prime ministerial candidate Narendra Modi would score a decisive election win, sending markets to fresh highs on Tuesday at the same time as piling pressure on the next government to deliver swift results on the economy.
Exit polls for the world's biggest election indicate that voters have turfed out the coalition government led by the Congress party, which has presided over a slump in economic growth and been troubled by a string of corruption scandals.
More than half a billion people voted in five weeks of staggered balloting - the largest ever exercise in democracy. The vote wrapped up on Monday and official results will be announced on Friday.
The benchmark BSE Sensex and the broader Nifty posted fresh record highs on Tuesday and the rupee hit a 10-month peak after the polls bolstered expectations that Modi's BJP and its allies would clinch the 272 parliamentary seats needed for a ruling majority.
"The market is now kind of priced to perfection," said Ritesh Jain, chief investment officer at Tata Asset Management.
Those projections may have altered expectations ahead of the actual results, according to some brokers and investors.
They now say that even a number of 240 seats or below, which until Monday had been widely forecast, would prove disappointing to markets.