Indian shares break records as main opposition wins seats

Shares for India’s companies have hit a new, record high as the Bharatiya Janata Party (BJP) – the main opposition party seen both as more business friendly and now more likely to deliver change – won a landslide majority during the state elections.

The BJP won 162 out of 183 assembly seats in Rajasthan, a northern state within India.

This left the ruling Congress-led collation government with only 21 seats; whose image has already been battered after a string of corruption allegations.

Overall, the BJP won in Chhattisgarh, Delhi, Madhya Pradesh and Rajasthan, all considered critical states, represent approximately 180 million people

India’s rupee then rose to a four-month peak, the Bombay Stock Exchange (BSE – India’s main index) rose 2.3%, and overall the country’s benchmark indexes reached a record high at close of day on Monday.

The BSE had reached 21,483.74 points during trading, but ended the day a few notches lower.

This development is in stark contrast from earlier last year, when the rupee fell to a record all-time low surrounding fears over America’s quantitative easing.

BJP in power?

The news is seen by many to bolster the Hindu nationalist BJP’s chances of winning the country’s next general election in May.

A briefing note by Nomura, a Japanese financial holding company, noted: “The BJP is considered more right-of-centre, pro-business and reform-oriented.”

“The fact that runaway spending by the ruling party has not won any votes could be taken as a very positive signal by the markets” the note continued.

“[It shows] voter preference for the kind of policy favoured by the electorate.”

Shares in construction and infrastructure – two industries which would presumably benefit if BJP won in the 2014 elections – did particularly well.

This includes Larsen & Toubro Ltd, India’s largest construction organisation, which rose 4.1%.

Ruling party concerns

The results, of course, are not good news for the ruling Congress party.

It has recently been implementing various measure to attract foreign investments to boost the economy and bolster its economy – which has been growing at the slowest rate in the last decade.

However, the heir-apparent Rahul Gandhi has often been noted as “out of touch” on key issues.

Sonia Gandhi, the current leader of the party, has said, “we will introspect and take action to rectify our mistakes,” before calling for an emergency meeting.

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