Sensex Soars 400 Points to Record High, Nifty Nears 7,000

The BSE Sensex jumped over 450 points, while the broader Nifty surged close to the psychological 7,000 levels as markets hit their second successive record highs on Monday. The Indian rupee also strengthened below the 60 per dollar mark. (Track markets)

The five-week-long elections wind up today and analysts are betting that the BJP-led NDA will emerge victorious on May 16, when results are announced. Polls have consistently shown the BJP and its prime ministerial candidate Narendra Modi ahead, raising expectations the opposition party, which is seen by markets as being more investor- and business-friendly, will either win or come close to an outright majority.

Exit poll results, due later in the evening, will throw a clearer picture, but clearly markets are already factoring in a stable government post May 16.

(Also read: What Triggered Sensex Surge Ahead of Exit Polls)

"I am not surprised with the rally. Markets have to factor in the possibilities of election outcome... A 5 per cent upside can take the Nifty to 7,100-7,200 and that looks possible," said Deven Choksey, managing director of KR Choksey.

Overseas investors resumed aggressive buying in equities and on Friday they bought shares worth Rs 1,268.78 crore in the cash market. Year-to-date, FIIs have bought Indian shares worth over $4 billion, though domestic institutional investors continue to stay at the sidelines.

Banking and energy stocks led the rally today. However, defensive stocks such as IT and pharma were under selling pressure as investors bet on high beta cyclicals, which have been the big outperformers this year.

Private lender HDFC Bank was the top Nifty gainer, rising over 4 per cent. Reliance Industries, which gained over 5 per cent in morning trade, was up 2.6 per cent. Coal India, realty major DLF, State Bank of India, state-run BHEL and car maker Maruti Suzuki traded with over 3 per cent gains.

IT major Wipro, TCS and HCL Tech and drugmakers Sun Pharma and Cipla traded with 1-2 per cent losses. United Spirits shares also saw selling pressure today. (Track top gainers and losers)

The Nifty has surged 17 per cent since September 13 - the day the BJP nominated Narendra Modi as its prime ministerial candidate, hitting its latest record on Friday.

But if BJP falls short of a majority, markets could plunge 8 to 10 per cent in one day, and up to 20 per cent in the aftermath, analysts say. (Read: What if the BJP falls short of majority)

Mr Choksey says the Nifty can slip to 6,600 if results are not up to expectations.

As of 12.15 p.m., the Sensex traded 395 points higher at 23,389, while the Nifty was up 108 points at 6,967. Earlier, the Sensex made a high of 23,453, while the Nifty hit a record high of 6,988.