On Monday, India’s rupee held steady while stock futures surged, buoyed by exit polls indicating a probable third term for Prime Minister Narendra Modi, generating optimism among investors regarding potential investments in infrastructure and manufacturing to sustain economic growth.
Exit polls over the weekend projected that Modi’s Bharatiya Janata Party (BJP) and its alliance could secure a significant mandate, potentially increasing their current 303 seats in the 543-member lower house, which could grant them a two-thirds majority—a pivotal threshold for initiating amendments to the constitution.
The anticipated victory, while widely expected, exceeded analyst forecasts in terms of margin. If these projections hold true in the official results expected on Tuesday, it would be viewed positively by equity markets, which have been riding high on the wave of economic growth.
NIFTY 50 index futures demonstrated a robust increase of approximately 2.6 percent in early trading, according to data from the NSE International Exchange, suggesting the index could open at record levels, currently standing at 23,343.5.
Moreover, early trading in the non-deliverable forwards (NDF) market indicated a firm rupee, with the currency trading at 83.09 to the dollar in the spot NDF market, a slight improvement from its Friday close of 83.46 in the spot foreign exchange market.
Rob Brewis, representing UK-based Aubrey Capital Management, expressed confidence in Modi’s potential re-election, attributing it to the economic progress witnessed by most Indians over the last decade. He emphasized the importance of this potential outcome as a vote of confidence in Modi’s leadership, which could pave the way for accelerated economic growth, a sentiment likely to be well-received by the markets.
However, it’s worth noting that India’s exit polls have a history of inconsistency, occasionally failing to accurately predict outcomes. With the results of the general election among a billion eligible voters set to be announced on Tuesday, the final verdict remains to be seen.
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