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."
Correlating the ups and down in the Indian rupee with the stock market, Vijay Bhambwani, CEO, bsplindia.com, suggests that if the rupee continues with its downward fall, the Indian stock market may fall breach October lows and fall further. “If the rupee falls below the 53.0-53.50 mark vis-a-vis the USD, expect a mini meltdown atleast in the equity markets. In that case, the 2250 level (on Nifty) will be breached easily to form a new low. The possibility of that low being below the 2000 levels on the Nifty spot is fairly high,” he says. Bhambwani supports his outlook by comparing the value of rupee at the time of October lows. “The October 2008 lows were made with the INR at 51.20 - 51.40 band. The rupee has breached the 52 level since then. Clearly the nation’s ‘share price’ (currency) indicates weakness. The curency market is a far more accurate barometer of the nation’s health compared to the equity indices. Whether you like it or not, we are under siege. Had it not been March (NAV ...
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