Indian shares extended their rally on Monday after Prime Minister Modi’s party and its allies scored a decisive win in the country’s richest state of Maharashtra.
The NSE Nifty 50 rose 1.32% to 24,221.9 points, while the BSE Sensex gained 1.25% to 80,109.85. The benchmarks logged gains of 2.5% on Friday, their best session since early June.
On Saturday, the Bharatiya Janata Party-led National Democratic Alliance (NDA) won 233 of 288 seats in Maharashtra, home to India’s financial capital of Mumbai. The state has seen multiple regime changes over the last five years after an unclear mandate in 2019.
“Given the emphatic nature of the ruling NDA’s victory, markets will rise further as political instability in one of the most industrialised and economically important states comes to an end,” said Abhishek Goenka, founder and CEO of IFA Global.
Indian shares post best session since early June, snap two-week losing streak
The Nifty and Sensex as well the broader small- and mid-caps slipped into correction territory in November on moderating earnings and foreign outflows.
Upbeat sentiment after the election results could spur a mini risk-on rally as the government shifts its focus to spending and as valuations turn favourable for large-caps after the correction, said Gautam Duggad, analyst at Motilal Oswal.
HDFC Bank, the heaviest weighted stock on the Nifty 50, rose 2.3%, while oil-to-telecom conglomerate Reliance gained 1.7%.
State-owned banks advanced 4.16%. They rose 3% on Friday on easing worries of credit risks from exposure to Adani group stocks.
High-weightage banks and financials added about 2% each.
Six of the 11 Adani group stocks rose on Monday.
The conglomerate lost about $28 billion over the last two sessions as investors cut their exposure to the group after the U.S. indicted chairman Gautam Adani and seven others on alleged bribery charges.
The group has denied the allegations, calling them “baseless”.
Food delivery platform Zomato jumped 3.5% after it was selected to replace JSW Steel on the Sensex on Dec. 23.
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