Indian Stocks Climb to a Record Before Exit Polls

Indian stocks rallied, sending the benchmark index to a record, and the rupee touched a nine-month high amid speculation exit-poll results may show a victory by the main opposition party led by Narendra Modi.

Coal India Ltd., the world’s biggest producer of the fuel, was the best performer on the S&P BSE Sensex. State Bank of India jumped 3.2 percent, sending a gauge of 12 lenders to a record. Reliance Industries Ltd., owner of the world’s largest oil-refining complex, rose to a three-year high. The rupee was little changed at the close after rising to the highest level since July.

The Sensex jumped 2.4 percent to 23,551 at the 3:30 p.m. close in Mumbai. Elections that began April 7 draw to an end today, with the final round of polling in 41 constituencies. The rally may extend if the Bharatiya Janata Party-led alliance wins more than 266 seats, approaching the 272 seats needed for a majority, according to a Bloomberg survey of 19 brokers and investment advisory firms. Votes will be counted on May 16.

“The market seems to have made up its mind that a Modi-led government will come to power,” Aneesh Srivastava, chief investment officer with IDBI Federal Life Insurance Co., said by phone from Mumbai. “There’s an expectation that a change in government will improve economic fundamentals.”

The Sensex has risen 19 percent since Sept. 13, when the BJP named Modi as its candidate for prime minister. Rakesh Arora, head of research at Macquarie Group Ltd. in Mumbai and the most accurate forecaster for the Sensex in 2013, said in a Bloomberg News survey last month his year-end Sensex target of 23,900, or 1.5 percent above today’s close, may “prove conservative” if Modi comes to power. Global investors have bought more than $10 billion of local stocks and bonds in 2014.

Output Data

Prime Minister Manmohan Singh’s Congress party looks set for its worst-ever electoral performance as voters punish the government for graft scandals, Asia’s fastest retail inflation and slowing growth. Exit-poll results can be telecast after 6:30 p.m., according to the Election Commission.

Factory output contracted 1.5 percent in March from a year earlier, after declining 1.9 percent in February, according to the median estimate in a Bloomberg survey before data due at 5:30 p.m. today. Consumer-price inflation accelerated to 8.5 percent in April from 8.31 percent in March, a separate survey shows before figures also due today.

Coal India climbed 7.3 percent, the most in three years, to 331.05 rupees. Reliance added 3.1 percent and Oil & Natural Gas Corp., the largest state-owned explorer, rose 3.1 percent. Natural gas-supplier Gail India gained the most since March 24. The S&P BSE Oil & Gas Index rose to a three-year high, the best performer among the 13 sectoral indexes compiled by the BSE.

Energy Reforms

“Some industrial and energy companies rallied on optimism the new government will push ahead with reforms” meant to ease state control on prices of fuels, Suhas Naik, chief operating officer at IL&FS Portfolio Management Services Ltd., said by phone from Mumbai.

Larsen & Toubro Ltd. advanced 3.3 percent and Bharat Heavy Electricals Ltd. rose 2.4 percent. State Bank climbed to its highest level since May 22. HDFC Bank Ltd., India’s biggest lender by value, soared 4.7 percent to a record 792.15 rupees. The S&P BSE Bankex rose 2.5 percent.

The Sensex trades at 14.6 times its projected 12-month profits, equal to the average multiple over the past five years. The MSCI Emerging Markets Index is valued at 10.5 times.

The CNX Nifty Index on the National Stock Exchange surged 2.3 percent to a record 7,014.25.

India VIX, which gauges the cost of options on the Nifty, fell 1.6 percent to 37.11. The gauge surged 10 percent on May 9 as traders braced for volatility before election results. The CNX Nifty moved an average 14 percent in the two days after the results of the last three elections.

Overseas investors bought a net $210.2 million of shares on May 9, the 14th day of purchases, taking this year’s inflows to $5.6 billion, data compiled by Bloomberg show.

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