Sensex crosses 23k

Foreign investors raised an early toast to Narendra Modi, anticipating the victory a BJP-led coalition in the general elections next week, pushing the sensex past a record high of 23K on Friday with a 650-point salute, the biggest such gain since September, 2013.
Rumours of an exit poll predicting the formation of an NDA government at the Centre fired up the markets. The rally was triggered on hopes of a new formation which will replace the UPA government that failed to push economic growth for the last three years because of policy paralysis. This led the sensex to a new life high of 23,048 in late trades. The index closed just a tad off its all time-high of 22,994, also its best-ever closing level. The day’s rally also added about Rs 1.8 lakh crore to investors’ wealth with BSE’s market capitalization now at Rs 76.8 lakh crore.
Some Dalal Street veterans questioned the Rs 1,269-crore net FII flow for the day, the highest in the last several weeks and also about four times the daily average inflow for the last five sessions. So far this year, FIIs have pumped in nearly $6 billion in Indian equities and this figure is expected to rise sharply if Modi comes to power and tries to bring the country’s economic growth on the fast track, market players said.
Banking was the star performer of the day on hopes that as the economy kickstarts, non-performing assets of the sector, which has been the biggest drag on their stock prices in recent times, will come down.
Market players pointed out that a weak monsoon could play a dampener after the polls. Already the Australian weather authority has warned of an El Nino, above average warming of South Pacific Ocean that leads to erratic weather conditions in several countries, including lower monsoon rains in India. Economists have warned that if El Nino affects the coming monsoon that may lead to rising food prices which, in turn, could lead to higher inflation. With RBI’s prime focus being targeting inflation, a bad monsoon may eventually lead to higher rates in the economy, they said.