India’s benchmark equity index extended gains with the highest close in more than five months after two opinion polls showed Prime Minister Narendra Modi’s ruling coalition would be close to getting the seats needed to form a government, when election results are announced in May.
The S&P BSE Sensex climbed 1.3 percent to 37,535.66 at the 3:30 p.m. close in Mumbai, capping a second straight gain of above 1 percent, the first such two-day rise since May 2016. The NSE Nifty 50 Index rose 1.2 percent.
General elections are scheduled between April 11 and May 19, with results slated for May 23. Some investors see the rise in nationalistic sentiment amid recent tensions between India and Pakistan boosting the government’s chances in the polls. The Sensex surged 30 percent in 2014, the most in five years, when Modi’s party first formed a national government.
“In the light of cross-border tensions, investors believe that a single majority government is possible and the odds of the ruling coalition retaining power have increased,” said A. K. Prabhakar, head of research at IDBI Capital Market Services Ltd. It would be unlikely for Modi to be voted out since once there is “a standoff with a neighboring state, people tend to rally to the flag, regardless of whether the government’s policies are good or bad,” said Tim Love, who manages about $1 billion of EM equities in London for a unit of GAM Holding AG.
All except one of 19 sector sub-indexes compiled by BSE Ltd. gained, led by a gauge of property companies. The S&P BSE MidCap Index gained 0.7 percent and the S&P BSE SmallCap Index rose 1.1 percent.