The k2p blog

UPDATE!

Narendra Modi – The next Indian Prime Minister (photo Forbes)

The real results have to wait till Friday but early exit poll results suggest that

• the BJP led alliance (NDA) will get over 280 seats in the Lok Sabha (272 needed for majority) while the Congress led alliance (UPA) will get less than 120 seats. 
• BJP will be the largest single party
• the AAP may get 5 seats
• Narendra Modi will be the next Prime Minister

The markets rose over 3% today.

Turnout was a record at just over 66% (of an electorate of over 800 million voters).

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The Indian markets are reacting to rumours and “inside information” as to what the exit polls will reveal when they are published later today. The Election Commission has confirmed that the results of exit polls – which have been carried out over the last 6 weeks of polling and are prepared and waiting to be released – can be released after the polls close at 1830 local time (1500 CET) on the last day of the last phase of voting today.

Exit polls don’t have a very good record in predicting the result of Indian elections – especially when they are extrapolated. But we have the peculiar situation of markets being driven by the expectations of what the exit polls will say and where the actual results will not be known till Friday. Capital inflow from overseas has been particularly high and there is a feeling that this cannot be just on the advice of local investors without any special knowledge. There is a suggestion – not at all implausible – that some large investors and their overseas partners may well have carried out their own, private, exit polls. And, the story goes, these show that Narendra Modi and the BJP will get close to an absolute majority.

On Friday the BSE Sensex rose over 3% and so far today has risen another 2+%  – over 1000 points in a day and a half of trading.

BSE Sensex 12th May noon (Reuters)

NDTV: 

It seems that investors are betting that the BJP-led NDA will emerge victorious on May 16, when results are announced, analysts say.

“There is a lot of political hope that has got baked in valuations. Markets are factoring numbers close to 230-240 seats for the BJP alone, and if that is the case, the NDA will get a majority on its own. That will lead to pro-growth, right of central, stable formation, which is enthusing for the investors,” said Manishi Raychaudhri, strategist and head of research at BNP Paribas Securities.

Polls have consistently shown the BJP and its prime ministerial candidate Narendra Modi ahead, raising expectations that the opposition party, which is seen by markets as being more investor- and business-friendly, will either win or come close to an outright majority. The surprising part, however, is markets seem to be factoring in the best possible scenario (stable government led by Mr Modi) even before exit poll results, due later in the day. 

 One possibility why markets have not waited for exit poll results might have to do with speculation that big investors have already got a whiff of what results would be. In fact, overseas investors bought shares worth Rs. 1,268.78 crore in the cash market on Friday, their biggest purchase since March 28. Friday’s gains came at a time when markets had shed 2 per cent after hitting a record high of April 25. Clearly, smart money had some information. 

Deven Choksey, managing director of brokerage KR Choksey told NDTV that somewhere from the media, numbers suggesting that the BJP will get 260-270 seats, came out. It was in circulation on social media and markets took advantage of that, he said.

Tags: BSE Sensex, Election 2014, Exit polls, India, Narendra Modi, Stock market

This entry was posted on May 12, 2014 at 9:34 am and is filed under Business, India, Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.