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BW Businessworld

Nifty Breaches 7,000 Points For First Time, Sensex Soars

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The Nifty and Sensex surged to their second consecutive record high on Monday (12 May) as blue-chips such as Larsen & Toubro jumped on rising hopes that exit polls would show the Bharatiya Janata Party and its allies winning a majority in the elections.

The Sensex rose as much as 2.52 per cent (556.77 points ) to a record high at 23,572.88, while the Nifty rose as much as 2.35 per cent to a life high of 7,020.05, surpassing its previous record hit on Friday.

The optimism comes even as exit polls by media organisations - due to be released after 6:30 p.m. on Monday once the last votes are cast - have proven unreliable in the past. Actual results for India's five-week long elections are due on Friday.

A win for a BJP-led coalition is widely seen as setting the stage for a revival in confidence, investment and growth as Asia's third-largest economy steers through a rough patch.

The Nifty has surged 18.74 per cent since Narendra Modi became the BJP candidate on Sept. 13, as the opposition party is perceived by markets as being more business friendly at a time when the economy is growing at its slowest pace in a decade.

"Markets got a wind of exit poll showing a clear majority for the BJP-led allies, which got extrapolated as better growth prospects for India," said Deven Choksey, managing director at K R Choksey Securities.

"Markets were on a fire as optimism increased in favour of Bhartiya Janata Party (BJP) winning majority in Lok Sabha elections 2014," said Nidhi Saraswat, Senior Research Analyst, Bonanza Portfolio.

"Gains in benchmark indices were also supported by strong buying by retail investors in small and mid-cap stocks", said Rajiv Malik, a Delhi-based stock broker.

Foreign institutional investors (FIIs) bought shares worth a net Rs 1,268.78 crore on Friday as per provisional data from the stock exchanges.

Market experts said positive global cues and overall optimism also boosted the buying sentiment, lifting the indices to to their lifetime high levels

Broad-based Gains
The Sensex ended up 2.42 per cent (or 556.77 points) at 23,551, while the Nifty ended 2.27 per cent higher (or 155.45 points) at 7,014.25, adding to their over 3 per cent gains on Friday.

Gains were broad-based, with 25 out of 30 listed companies on the benchmark BSE index posting rises.

However, risk was also seen increasing as NSE's volatility index, or India VIX, hit its highest intraday level since March 11, 2009, before ending 1.6 per cent lower.

Also on watch, consumer price inflation data due later in the day, the last one before the RBI's next policy review on June 3.

Domestic-oriented shares led the rally, with the NSE bank sub-index hitting a record high. State Bank of India Ltd gained 3.2 percent, while Larsen & Toubro Ltd rose 3.3 per cent.

Infrastructure shares also gained, with Ambuja Cements up 2.1 per cent, while state-run power equipment maker Bharat Heavy Electricals Ltd surged 2.4 per cent.

Reliance Industries Ltd gained 3.1 percent after the company and its partners in a gas block said on Saturday they were taking the government to arbitration seeking implementation of higher gas prices.

However, United Spirits Ltd fell 2.8 per cent after it agreed to sell its Whyte & Mackay scotch whisky unit to Emperador Inc in a 430 million pound ($729 million) deal, a valuation that was seen as lower than estimates by some analysts.