Exit Poll Predictions: The possibility of the ruling National Democratic Alliance (NDA) securing a nearly two-thirds majority in the exit polls has caused a significant surge in the stock market.

• Agencies predict the NDA will win between 316 to 400 seats.
• This outcome virtually guarantees Narendra Modi’s return as Prime Minister.
• Result: The index experienced its biggest one-day jump in nearly three years.

Investor Sentiment:

• Investors are optimistic about the continuation of market-friendly reforms under an NDA majority.
• Better-than-expected GDP growth figures for FY 2024 boosted confidence.
• S&P’s upgrade of India’s outlook from stable to positive added to the positive sentiment.
• Foreign institutional investors increased their buying activity, amplifying market gains.

Broader Market Impact:

• Nifty Midcap: Gained approximately 3.2 percent.
• Smallcap: Increased by about 2.4 percent.

Market Capitalization:

Total market capitalization of companies listed on the Bombay Stock Exchange rose by Rs 13.8 lakh crore to Rs 426 lakh crore.

Expert Insights:

Saurabh Mukherjee, Founder and CEO of Marcellus Investment Managers:

• The market was not expecting such a clear majority prediction.
• The confidence in the results led to the market surge.

India VIX:

• Volatility index fell 15 percent to 20.9.
• Had increased 82 percent to a two-year high of 24.6 since the start of elections on April 19.

Andrew Holland, CEO of Avendus Capital Public Markets Alternate Strategies:

• Last week’s market decline of 2 percent was more than offset by today’s rally.
• Some gains were attributed to short covering. Anticipation of foreign funds resuming purchases after two months of selling.
• Foreign portfolio investors bought shares worth Rs 6,851 crore.
• Domestic institutional investors bought shares worth Rs 1,914 crore.

Banking Sector Outlook:

• The banking sector has been underperforming but is expected to benefit from renewed foreign investor interest.
• Inclusion of Indian bonds in JP Morgan’s index is expected to boost bond market investments.
• Lower yields from increased bond investments are positive for banks.

The stock market’s surge reflects a combination of political optimism and economic growth expectations. Anticipation of continued market-friendly policies under an NDA majority has bolstered investor sentiment. The exit polls have set the stage for a bullish outlook, particularly in the banking sector, which is poised to benefit from increased foreign investments and favorable economic conditions.