A perceived Narendra Modi wave has brought about the much-needed buoyancy in the stock market for traders, according to stock market experts.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

At least 59 stocks have outperformed the BSE 100 index as of today. Among the top gainers are Adani Enterprise (111.6%) Adani Power (63.1%), Ashok Leyland (54.1%), JP Associates (51.3%), Crompton Greaves (48%) and a few public and private sector banks like Union Bank, Punjab National Bank, Bank of Baroda, State Bank of India and Yes Bank, all of which appreciated between 30 and 45%.

Market players feel that there are no fundamental reason or economic surge for such a ridiculous rise in stock prices in the last two months. This can only be based on perceptions about which political party would form the government. From hoping for a stable government to now that of a BJP-led government under Modi, punters are finding ways to keep the sentiment bullish and take the markets to newer heights.

This is quite possibly the reason why as of April 10, Adani Enterprises grew 111. 6% over the last two months to top the BSE 100 Index. The market perceives group chairman Gautam Adani to be a Modi crony.

Starting February 10 at Rs220.20, today it has reached Rs470.25. It's market capitalisation increased by Rs27,281 crore at Rs51,718 crore. Surprisingly, lesser known HDIL too shot up 75.9% to Rs75.55 (from Rs42.95) with a market cap of just a little over Rs3,000 crore, up Rs1,366 crore.

"There is a perception that Adani is closer to the Modi camp and the group could benefit from untold gains," a senior director at a foreign fund said. "But this doesn't seem logical; the market is overhyped... Any out of turn corporate favours and the opposition would demand accountability."

"Adani appreciated by over 80% in the last one month or so. Today it has gained another 22% to surpass the 100% mark. Of course, the stock is riding on the Modi factor," an analyst said.

Most market participants did not wish to be identified but all spoke about the overhyped market being spruced up by foreign institutional investors (FII). They have pumped in Rs30,688 crore in the last two months as against being net sellers of stocks in January 2014 to the tune of Rs142 crore.

In the same period of 2013, FIIs net investment in equities stood at Rs14,619 crore.

"It's pure punting and foreign players are fuelling the market with cash based on advice by none other than our own brokers," said a fund manager at a brokerage firm.

The BSE and Nifty indices in the same period appreciated a mere 11.71% and 12.27%. Stocks that have outperformed the indices numbered 59 in the BSE-100 index.Market participants do not see the trend continuing beyond May 16 when the elections results will be announced. "In fact, the country could face the most stringent budget under the new government by June-end... By then, the euphoria will subside and the markets could see realistic levels," a fund manager at a foreign-owned brokerage said.