Mumbai, Mar 14: Following Prime Minister Narendra Modi’s landslide victory in Uttar Pradesh assembly elections, the NIFTY rose as much as 2.1% to a record high on Tuesday. BJP’s sweeping victory strengthened his claim to a second term in national elections in 2019, and investors are betting it will embolden the ruling party in the centre to embark on more reforms including launching a national sales tax.
The broader NSE Nifty rose as much as 2.1% to a record high of 9,122.75 points in the first trading session since the election results were announced, surpassing its previous peak of 9,119.20 on March 4, 2015. But the index then pared some gains and was up 1.5% at 09:40 IST, while the benchmark BSE Sensex was up 1.6%. The gains in the rupee prompted the Reserve Bank of India to intervene once it strengthened to around 66.16 per dollar, traders said.
Modi’s victory “is a huge confidence boost for reform and is another step on the way to a story that could place him as one of the most successful reformers in history,” said Simon Quijano-Evans, investment strategist at Legal & General Investment Management in London. The prime minister’s win should bode well for foreign portfolio investment in India.
Foreign investors have already started returning to the country, having bought a net $1.5 billion in equities and $887.3 million in debt in February, following four consecutive months of net sales. They have remained net buyers in March.