Riding the exit poll projections that mostly point to the return of the BJP-led NDA government, the benchmark Sensex at the Bombay Stock Exchange jumped 1,421.9 points or 3.75 per cent Monday. Sensing the return of the Modi government, the Sensex has over the last three trading sessions risen 2,237 points or 6 per cent.
The Sensex movement on exit poll projections has been a constant, at least over the last five general elections. While the exit poll projection of the Modi-led NDA coming to power in 2014 saw the Sensex climb 6.8 per cent in the period between two days before the exit polls and post exit poll, exit poll projections of the Vajpayee-led NDA securing a majority in 1999 resulted in a 6.6 per cent jump in Sensex value in the same three-day period.
On the other hand, in 2004, when few exit polls projected that the NDA may fall short of the magic number despite having allies across major states within its fold, the Sensex fell 7.5 per cent in the three-day period. This, political observers say, could be because the feel-good factor and the India Shining campaign had heightened expectations, and with some exit polls predicting that the BJP-led NDA would not get a clear majority, that cast a shadow of disappointment.
Similarly, as the exit poll results of 2009 projected a thin edge for the UPA but not a clear majority, the Sensex rose only 1.6 per cent during the three-day period. If the BJP’s defeat in 2004 was unexpected, there was no certainty over the UPA’s return to power in 2009. Besides, as the Left parties had already quit the UPA over the India-US nuclear agreement, there were still doubts over prospective allies for the Congress which was preparing to form the government.
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With every exit poll telecast live Sunday predicting the return of the Modi-led NDA to power, observers see continuity of policies and programmes. However, some market participants are seeing the post exit poll rally this time as an “immediate overreaction”. The head of a leading financial services firm said, “While exit poll projections for 1999 and 2014 elections brought with them hope for reforms and positive policy formation, this time it’s a vote for continuity and, hence, I feel the market movement is an overreaction. I want to understand what the Modi government can offer over the next five years that it has not been able to do in the last five years.”
Another market expert said the sharp jump over the last three trading sessions probably reflects that the market was not expecting a clear majority for the NDA government earlier and when exit polls showed that it is either getting a majority or is within striking distance of majority, it led to a sharp rally.