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Record high for Indian markets

Article By: ,  Financial Analyst
May 13, 2014 10:15 AM

Indian stock markets have risen to a new record high this week following the news the Narendra Modi-led Bharatiya Janata Party (BJP) is likely to win the country's latest general election.

In the early stages of trading this morning (May 13th), the Sensex hit its highest ever level by rising to 23,941.32 points, racking up 1.7 per cent of gains in the session.

After exit polls on Monday indicated that a win for BJP looks to be on the cards, the Sensex rose by 2.4 per cent with investors responding positively to the likelihood of Mr Modi becoming the new prime minister of the country.

Salman Ahmed, global fixed income strategist for Lombard Odier Investment Managers, stated that there are going to be two main changes as a result of the arrival of Mr Modi's government.

Infrastructure investments

Mr Modi is expected to be pro-investment and this has provided a timely boost to the Sense by helping it to reach a new record high. Mr Ahmed noted the new prime minister is also likely to invest heavily in infrastructure, which could in time bring India's economy more in line with superpowers around the world such as the US.

He said: "A strong government that understands the need for infrastructure should be able to get reforms in place and put in place the conditions for long-term growth."

Results of the Indian election are yet to be formally announced, but it seems inevitable the BJP is going to come out on top and Mr Modi will take the reins of the country in the coming days.

David Kuo, director at The Motley Fool a financial advisory firm, told the BBC that investors are hoping BJP will be able to secure a majority mandate, as this "means they will not be constrained by the demands of smaller regional allies when it comes to implementing key reforms".

The Sensex fell away slightly later in the day, but was still strongly up for the day.

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