(Bloomberg) — India’s stock futures jumped after exit polls indicated a resounding victory for Prime Minister Narendra Modi’s ruling party in general elections that concluded Saturday.
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Contracts on the nation’s benchmark Nifty 50 Index climbed as much as 2.6% in early trading on Monday after most pollsters predicted the Bharatiya Janata Party-led alliance to clinch between 350 and 400 seats in total. That’s substantially more than the 272 required for a majority in the 543-seat lower house of parliament. The votes will be counted on Tuesday.
The predictions are a relief for investors rattled by recent stock market volatility, which was driven by concerns that the BJP might fall well short of Modi’s ambitious 400-seat target. A landslide win would enable the party to push through policies that are seen as crucial for boosting India’s economic growth, which is already among the world’s fastest.
“The suggested size of the majority would allow the government to continue unabated with its current policy program,” Gary Dugan, chief investment officer at Dalma Capital Management Ltd. in Dubai, said over the weekend. “We could imagine a 3-5% return from the market on Monday.”
Offshore Indian rupee non-deliverable forwards climbed as much as 0.4% on Monday, with the nation’s bonds also expected to advance.
While the final results might differ from the exit polls, the strength of the projected victory is expected to benefit risk assets. Indian equities reached a record in May, while the bond markets are near their highest levels in about a year.
Read more: India’s Equity Rally Hinges on Modi Bettering 303-Seat Tally
Should the results on June 4 align with the exit polls, analysts expect the NSE Nifty 50 Index to reach a new record. The gauge slid nearly 2% last week as foreign investors treaded cautiously ahead of the election outcome.
“Foreign investors will need to cover short positions quickly,” said Abhay Agarwal, founder and chief investment officer at Piper Serica Advisors. “Margin calls on short positions may lead to the market spiking beyond 23,000 on Monday — a new high — and close to 23,500 on June 4th” if the numbers for the ruling alliance are above 350, he said.
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