Sensex hits record high on election results

<p>Narendra Modi is set to become India’s new leader.</p>

The Indian Sensex has continued to hit new record highs after it become clear Narendra Modi had won the country's general election.

Mr Modi's Bharatiya Janata Party (BJP) are believed to have racked up a comprehensive victory in the elections, with investors responding extremely positively to the news. The Sensex has been hitting new highs all week as the likelihood of Mr Modi becoming prime minister increase.

One of the reasons for this is that Mr Modi is strongly pro-business and investors have welcomed his plans to boost the Indian economy over the course of the next few years.

Following the latest exit polls coming out of India, there was also a strong rise in the value of the rupee, which rose to a ten-month high in comparison to the US dollar, BBC News reports.

Stocks up

The Sensex rose by more than four per cent yesterday (May 15th), reaching 24,956 at the open of trade on Friday. There was also a strong performance on the broader NSE share index, which also hit a new record after it rose by more than two per cent.

Prannoy Roy, the head of India's NDTV news channel, stated that it is clear from the exit polls to date that it will "undoubtedly" be a victory for the BJP and Mr Modi.

Desmond Chua from CMC Markets added that investors are becoming excited about the potential impact of the reforms Mr Modi has pledged to push through to boost Indian business after he becomes the country's new leader. Infrastructure and power upgrades are among the improvements believed to be at the top of Mr Modi's agenda for the coming years.

Mr Chua said: "India's Sensex has been on a relentless rally due to build in expectations of a positive election outcome, with opinion polls pointing towards a single coalition led by BJP's Narendra Modi. In the event that we see anything else, especially in the case of a hung parliament, we can expect to see a deep correction after such a huge rally."

Learn about the Asian markets and CFD trading at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.