India stocks leap as vote count favors Modi win

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Associated Press

Posted on May 16, 2014 at 4:32 AM

Updated Friday, May 16 at 4:36 AM

HONG KONG (AP) — Indian stocks jumped Friday as preliminary results from national elections indicated the pro-business opposition had won a landslide victory. Other global markets were subdued following lackluster economic indicators.

Indian stocks have been rising since voting in the world's most populous democracy got underway six weeks ago. Investors have been anticipating of a victory for the Bharatiya Janata Party and its allies.

Narendra Modi, the party's candidate for prime minister, has campaigned on a pledge to revive economic growth amid widespread dissatisfaction with the ruling Congress party after a decade in power. Full results are expected later Friday.

The Sensex stock index in Mumbai surged in early trading, jumping as much as 6.1 percent to touch an all-time high of 25,375.63, before paring gains. It was 1.3 percent higher at 24,192.77 in afternoon trading. India's currency also strengthened. The dollar fell to 59.05 Indian rupees from 59.46 rupees Thursday.

A Modi victory is "very important for Indian politics, in part because of the much needed reforms" he is expected to implement, said Desmond Chua, analyst at CMC Markets in Singapore.

Reforms would help to improve the business climate in India, where growth has faded because competition has been stifled by rising corruption and elite families control large chunks of the economy, he said.

The Federation of Indian Chambers of Commerce and Industry applauded Modi's victory. President Sidharth Birla said the business group "hopes that this mandate will help the leadership restore much needed investor confidence, attract higher investments and generate employment."

The world's other stock markets were more subdued, with most other Asian benchmarks finishing flat or lower following a Wall Street sell-off after a batch of mixed reports on the global economy.

European stocks were steady in early trading, with France's CAC 40 down less than 0.1 percent to 4,443.91. Germany's DAX slipped 0.1 percent to 8,648.03 while Britain's FTSE 100 added 0.1 percent to 6,850.12.

Futures pointed to a slightly higher open for Wall Street. Dow futures crept up less than 0.1 percent to 16,422.00 and S&P 500 futures rose less than 0.1 percent to 1,867.70.

Japan's led the decline in Asia, with Tokyo's Nikkei 225 stock shedding 1.4 percent to 14,096.59.

South Korea's Kospi rose 0.2 percent to 2,013.44 while Hong Kong's Hang Seng lost 0.1 percent to 22,712.91. In mainland China, the Shanghai Composite rose 0.1 percent to 2,026.50. Australia's S&P/ASX 200 retreated 0.6 percent to 5,479.00.

In currencies, the dollar rose to 101.57 Japanese yen from 101.54 in late trading Thursday. The euro edged lower to $1.3716 from $1.3717.

Oil prices were flat, with benchmark crude for June delivery unchanged at $101.50 in electronic trading on the New York Mercantile Exchange. The contract fell 87 cents to close at $101.50 on Thursday.

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