BJP FRONT RUNNER IN LOK SABHA POLLS

Two foreign brokerages today indicated that BJP's victory in the Assembly polls makes it the "front runner" in the May general elections but said that it is too early to conclude given the past record of varying swings between state and national poll outcomes. "These results will place BJP as the front-runner in the May general elections," Bank of America Merill Lynch said in a note today. Japanese brokerage Nomura said: "The results indicate a rising wave in favour of the BJP as well as an anti-Congress vote in these states." Propped by the electoral outcomes yesterday, both the Sensex and Nifty closed at record highs today. While the Sensex surged to a new lifetime high on all-round buying at 21,326.42 with a gain of 329.89 points or 1.57 per cent, the broader Nifty rallied to its life-time peak of 6,363.90 points, a hefty rise of 104.00 points or 1.66 per cent jump. This helped investor wealth soar by about Rs 75,000 crore. The rally was led by sustained capital inflows. In morning trade, the benchmark BSE barometer soared to historic high of 21,483.74 points, while the Nifty also scaled a new intra-day record high of 6,415.25, surpassing its previous intra-day high of 6,357.10 registered on January 8, 2008. However, both BofA-ML and Nomura said even though the Assembly poll outcomes increase the market's expectations, such hopes may be tempered as these states constitute only 13 per cent of the seats in the Lok Sabha and moreover, many a time the results of state elections and the general elections have been divergently opposite. "Doing well in these states is not enough to indicate the direction of the 2014 elections; it only indicates a direction where these 13 per cent seats could go. In 2003, the BJP had won three of these four states but lost the 2004 elections," the BoFA-ML note said. In results of the four states, which came out yesterday, BJP held on to MP and Chhattisgrah, trounced Congress in Rajasthan and emerged as the single largest party in the national capital, where Aam Aadmi Party secured 28 seats in its debut. On the success of the AAP, BofA-ML said: "The success of the recently formed Aam Aadmi Party in Delhi has again reinforced the split nature of politics where the non-Congress, non-BJP regional parties are getting powerful. "This is a reminder that we will still see a coalition government in 2014 where regional parties will be crucial."