India Stocks Extend Rally as Modi’s Party Wins Key State Polls
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Stock benchmarks in India surged on Monday as Prime Minister Narendra Modi’s Bharatiya Janata Party-led alliance secured a thumping victory in the nation’s wealthiest state of Maharashtra.
The NSE Nifty 50 Index climbed 1.3% to 24,221.90, its best two-day show since early June. Stocks also got a leg up from gains in regional markets, sparked by a weak dollar and investor optimism that Scott Bessent’s appointment as Treasury Secretary under the Trump administration may lead to moderation of US Treasury yields and tariffs.
The decisive mandate provided a much-needed boost to equity bulls, who had been waiting for a catalyst after Indian stocks slid into correction territory earlier this month. The alliance’s victory ensures policy continuity in the state, home to India’s financial powerhouse of Mumbai, and several of the nation’s largest investments.
“This result will positively impact investor sentiment, especially in infrastructure, urban development, and manufacturing sectors aligned with BJP’s policies,” said Palka Arora Chopra, director at Master Capital Services Ltd. “The political outcome suggests a positive outlook for the Indian stock market.”
Global funds have withdrawn over $14 billion from local stocks since the start of October amid slowing earnings growth, elevated valuations and the uncertainty over interest rate cuts in the US. There’s nervousness in the air, with the recent US charges against the Adani Group likely to add to the foreign investor outflows.
Read: US Bribery Charges Plunge Adani’s Empire Back Into Crisis
Even so, the Maharashtra election outcome is a shot in the arm for the embattled Adani Group, which has aligned its business strategies to the policy priorities of the Modi administration.
Flagship Adani Enterprises Ltd.’s shares closed 1.3% higher, as the conglomerate pushes ahead with the $3 billion redevelopment of one of Asia’s largest slum in Mumbai. However, shares of Adani’s green energy unit slumped 7.9% after TotalEnergies SE suspended new investments in the group companies.
Stocks of infrastructure firms, seen by investors as key beneficiaries of Modi’s policy agenda, also jumped, with a sector gauge rising 2.2%. HDFC Bank Ltd.’s stock contributed the most to the gains on the benchmarks, rising 2.3%, driven by late buying by global passive funds as the increase in its weighting in MSCI indexes took effect.
“The political message from this election is huge and highly positive from the market perspective,” said V.K. Vijaykumar, strategist at Geojit Financial Services Ltd. The recent bout of short-covering in large caps will keep the market resilient, he said.
(Updates final prices.)
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