Indian stocks jumped to record highs on Thursday as early results in the world’s biggest election showed Prime Minister Narendra Modi on course for a second term.
Traders and business leaders welcomed trends in the vote count showing Modi’s Bharatiya Janata Party (BJP) was set to win a majority, expressing hopes it could lead to deep economic reforms of Asia’s third-largest economy.
The Bombay Stock Exchange’s Sensex index rose more than two percent to pass the 40,000 mark for the first time ever while the Nifty crossed 12,000 points, also a new landmark.
India’s rupee also strengthened, hitting 69.51 against the dollar from 69.67 late Wednesday.
“A perception that Modi is business friendly and an end to political uncertainty is boosting market sentiment,” independent Mumbai-based economist Ashutosh Datar told AFP.
After more than four hours of counting, figures from the Election Commission showed the BJP leading in 292 seats out of 542 with the rival Congress party on less than 50.
If confirmed — no results have been published yet — this would push the BJP over the 272 seats needed for a majority.
It could also beat its tally of 282 when Modi swept to power in the world’s biggest democracy in 2014 with the parliament’s first single-party majority in 30 years.
The result would give the BJP and its allies a commanding majority of around 340 seats.
“Time for transformation of India. Time for deep reform. I dream of us as a global superpower in my lifetime,” tweeted India’s richest banker, Uday Kotak, as he congratulated Modi.
Indian stock markets have rallied since exit polls on Sunday pointed to a Modi triumph.
On Thursday, the benchmark Sensex rose more than two percent to peak at 40,124.50, while the Nifty, a smaller index based on 50 Indian companies also increased more than two percent, touching a new record of 12,041.00.
Modi was elected five years ago on his promise to shake-up India’s economy and create jobs for the millions of young Indians who enter the workforce every year.
His record has been mixed, however.
The 68-year-old has been praised by India’s business community for passing a number of economic reforms intended to ease the doing of business and boost foreign investment.
But he was widely slammed for a disastrous shock cash ban and the sloppy introduction of a new single tax on goods and services that both set back economic growth.
GDP growth slowed from 7.1 percent to 6.6 percent in the third quarter of the 2018-19 financial year, data released in February showed.
Economists say the Indian economy needs to grow at least seven percent per annum to create jobs for the estimated one million people entering the labour market each month.
Data leaked earlier this year appeared to show unemployment at a four-decade high of 6.1 percent in 2017-18, showing that Modi had failed on his jobs pledge.
He barely mentioned the economy during this campaign, focusing instead on security and nationalism, but analysts expect an economic bounce if he wins re-election.
“A stronger government can implement stronger economic reforms, hence foreign investors will be bullish about investing in the Indian economy,” said Datar.