Traders Whipsawed as Gujarat Poll Spurs Early Sensex Slump
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Indian equities rebound, bonds, currency pare initial declines
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BJP set for a win in Gujarat, Election Commission data show
Indian assets were volatile in Monday trading, with steep stock losses giving way to gains as vote-counting from the Gujarat elections suggested Prime Minister Narendra Modi’s party would win more seats than early leads had indicated.
The S&P BSE Sensex plunged as much as 2.6 percent as trading began, before rebounding to a gain of 0.8 percent at 11 a.m. in Mumbai as Modi’s party appeared set to retain power in his home state. The rupee weakened 0.1 percent against the dollar as a measure of the currency’s volatility headed toward a seven-week high. The yield on 10-year government bonds climbed two basis points to 7.15 percent.
The Bharatiya Janata Party was leading in 99 seats while the opposition Congress party was ahead in 71, the Election Commission trends for 175 of the 182 seats at stake showed at 11 a.m. in Mumbai. The BJP had a vote share of 49.2 per cent while it was 41.5 per cent for the Congress, data show.
“Traders are heaving a sigh of relief after a tumultuous opening session,” said Soumen Chatterjee, head of research at Guiness Securities Ltd. “The BJP has clawed its way back into the Gujarat race and a victory will be seen as vote in favor of Prime Minister Modi’s reforms agenda.”