Modi Calls for Healing as India Stocks Surge on Projected WinAndrew MacAskill
Narendra Modi called for healing after a six-week Indian election ended with exit polls signaling his opposition bloc would win a majority, boosting stocks to an all-time high as investors bet he’ll revive growth.
Modi’s Bharatiya Janata Party and its allies will win 249 to 340 seats, according to six exit polls released yesterday, with 272 needed for a majority. The Congress party and its allies, in power for the past decade, are projected to win 70 to 148 seats. Results will be announced on May 16.
“It looks to be a very good mandate to govern,” said Mohan Guruswamy, chairman of the Centre for Policy Alternatives in New Delhi and a former finance ministry official. “Whether he can rise to that challenge of pushing through reforms in such a vast and complex a country as India remains to be seen.”
The polls, which have overestimated the BJP’s strength in the past two national elections, could further boost Indian stocks and the rupee as investors bet Modi will turn around an economy with Asia’s second-fastest inflation. The tally indicates the best-ever performance for the bloc led by the BJP, a party rooted in Hindu nationalism that has drawn criticism from opponents who say it will quash minority rights.
“Let’s place people over politics, hope over despair, healing over hurting, inclusion over exclusion and development over divisiveness,” Modi, 63, said in a statement sent by the BJP last night. “It is natural for the spirit of bi-partisanship to get temporarily lost in the midst of an election campaign, but now is the time to regain it.”
Indian stocks rose to a record and the rupee gained after the exit polls. The S&P BSE Sensex climbed 1.6 percent to a record in Mumbai today and the rupee touched a nine-month high.
“We expect the rally to continue on hopes of a strong government coming to power,” said Shishir Bajpai, a director at IIFL Wealth Management Ltd. in Mumbai with $8 billion under management and advisory. Benchmark indexes may advance as much as 6 percent this week, he said.
Nine rounds of voting started on April 7 to pick 543 parliamentary seats across 28 states. Turnout averaged a record 66.4 percent, the Election Commission of India said, topping the previous high of 64 percent in the 1984 vote. In the 2009 election, the Congress alliance won 260 seats and the BJP group took 160.
The BJP and its allies did best in a poll by Today’s Chanakya, which showed them winning 340 seats compared with 70 seats for the Congress bloc. An ABP News-Nielsen exit poll forecast Modi’s group would win 281 seats, compared with 97 for Congress and its allies. A Times Now-ORG India poll gave 249 to the BJP group, with 148 going to the Congress alliance. Three other polls showed the BJP group winning or close to a majority.
“There has to be an element of caution because their track record at previous elections has been poor,” S. Chandrasekharan, director of the South Asia Analysis Group, said by phone from New Delhi, referring to exit polls. “They’re better at predicting the direction rather than the precise number of seats.”
Exit polls in the last two elections have given the BJP and its allies more seats than it actually won -- by about 30 seats in 2009 and as many as 70 seats in 2004. Congress’s surprise win to take power a decade ago led to the biggest one-day sell-off of stocks in more than four years, while its re-election in 2009 boosted the stock market by a record 17 percent on the next trading day.
Indian stocks may fall if the BJP-led alliance wins fewer than 230 parliamentary seats, according to a Bloomberg News survey of 19 brokerages and investment advisory firms.
U.S. President Barack Obama said India’s ability to hold the largest democratic election in history was “a vibrant demonstration of our shared values of diversity and freedom.”
“We look forward to the formation of a new government once election results are announced and to working closely with India’s next administration,” he said in a White House statement.
Modi’s rise has split the nation of 1.2 billion, where violence between Hindus and Muslims has played a defining role in politics since independence. The chief minister of Gujarat since 2001, Modi has been accused of failing to stop riots in the western state 12 years ago that killed more than 1,000 people, mostly Muslims.
Modi has repeatedly denied the accusations and a Supreme Court-appointed panel found no evidence he gave orders that prevented assistance from reaching those being attacked. Even so, regional party leaders such as Mamata Banerjee have blasted Modi over the riots on the campaign trail and said they wouldn’t join a government led by him.
Regional parties unaffiliated with the two major blocs are forecast to win between 146 to 165 seats, down from about 180 seats now, the polls showed. Banerjee’s All India Trinamool Congress based in West Bengal state and J. Jayalalithaa’s All India Anna Dravida Munnetra Kazhagam in Tamil Nadu are forecast to be the largest regional parties, with both winning 20 to 31 seats, according to the polls.
“Barring a complete upset that throws our calculations out of gear, they will have sufficiently large numbers as to muscle their way when dealing with coalition partners, if need be,” said Sumit Ganguly, the Rabindranath Tagore Chair in Indian Cultures and Civilizations at Indiana University, referring to the BJP bloc. “The lure of political office is so great that parties will flock to the winner.”
Modi has campaigned on his record in Gujarat, which has outpaced the national economic growth rate in 11 of the past 12 financial years for which data is available.
His main opponent is Rahul Gandhi, the 43-year-old scion of India’s foremost political dynasty and vice president of Congress, after Prime Minister Manmohan Singh said in January he wouldn’t stand for a third term. Gandhi has been campaigning on the party’s record of spending on programs ranging from cheap food to guaranteed work in rural areas.
The victor will need to revive an economy growing close to the slowest pace in a decade. Consumer-price inflation averaged 10 percent last year, eroding purchasing power in a nation where more than 800 million people live on less than $2 a day.
“The BJP has to proceed with caution,” said Milan Vaishnav, an associate in the South Asia program at Carnegie Endowment for International Peace in Washington, adding that Modi would have to avoid measures that would inflame religious tensions. “This mandate is fundamentally one about development and about the economy.”