Monday , September 24 2018

Exit polls vex stocks, rupee as majority seen eluding Indian PM


India’s equities gave up gains to close little changed, while the rupee and bonds declined Monday as exit polls signaled that majority may prove elusive for PM Narendra Modi’s BJP in elections in a key southern state.
At least four polls, including Today’s Chanakya, which accurately predicted Modi’s victory in 2014 elections, showed the BJP as the single largest party winning between 95 to 120 seats in the 224-member Karnataka assembly. The incumbent Indian National Congress — also the main federal opposition party — is seen bagging 72 to 99 seats.
“Margin of victory is the most important factor and with the exit polls indicating all kinds of permutations and combinations, the markets are definitely going to be volatile,”
said Avinash Gorakshakar, head of research at Mumbai-based Joindre Capital Services Ltd.
The benchmark S&P BSE Sensex added 0.1 percent to 35,556.71 at the close after swinging between gains and losses at least 12 times. Trading volume on the NSE Nifty 50 Index was 24 percent below the 30-day mean. The rupee slid 0.4 percent to 67.5825 per dollar and sovereign bonds declined for a fourth day, with the benchmark yield dropping as much as six basis points.
Investors fear an inconclusive verdict could prompt the federal government to take populist measures to shore up public support ahead of nationwide elections in 2019. Markets will cheer an outright win for BJP as a vindication of a slew of reform measures — including a nationwide sales tax and a funding plan for state-owned lenders — that prompted the first sovereign rating upgrade from Moody’s Investors Service in 14 years.
Exit Polls predict that the Janata Dal (Secular), a regional party led by former Prime Minister H.D. Deve Gowda, will be kingmaker in case of a hung assembly in Karnataka, which has a population equivalent to that of France. An India Today-Axis Poll pegged Congress as the front-runner winning as many 118 seats while Times Now VMR exit poll also predicted BJP finishing second. Both saw JD(S) finishing third.
The Sensex and the Nifty each climbed 1.7 percent on March 14 last year, a day after the BJP sealed a thumping victory in Uttar Pradesh, India’s most populous state. Votes for Karnataka ballot, that took place on Saturday, will be counted on May 15.

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