Sensex crosses 14k: day trading halted & creates history two upper circuits in one day

Markets trading halted for the day immediately after it resumed at 11:55 hours today at both the Bombay Stock Exchange and the National Stock, the benchmarks hit another upper circuit Monday as soon as the trade resumed after 2 hour break. Investors are euphoric after the United Progressive Alliance emerged victorious in the 2009 general elections.

Exchange as the NSE Nifty breached the 20 per cent upper circuit. 
When trading resumed at 1155 hours, the Nifty surged to 4,384.30 over the previous close of 3,671.65, a rise of 712.65 points or almost 20 per cent.
Similarly, the BSE Sensex zoomed by almost 2,100 points at 14,272.63 from the previous close of 12,173.42, a rise of 17.2 per cent. According to media reports turnover including cash and F&O was less than Rs 1000 crore.

All the major sector-indices were in the positive zone. Earlier trading was halted at the BSE and NSE for two hours as for the first time in the history of the Indian stock markets the benchmark indices hit the upper circuit OF 10%, that too within a minute of opening of trade.

With the Congress-led UPA getting over 260 seats in the general elections, it was expected that stock markets would react positively to the political developments, especially the formation of a stable government. Marketmen are upbeat given the fact that there will be no interference by the Left Parties and other regional parties in day-to-day functioning of the government and less number of allies will lead to a stable government which will run its course of five years.
The new government which is likely to be sworn in by Friday is expected to come-out with full budget within 45 days of resuming office, according to media reports.
Reforms in the banking sector, divestment of public sector undertakings, infrastructure, retail sector and insurance sector is likely to top the priority list.
The markets today opened for the first time after the election results were announced on Saturday. Sensex had opened 10.73 per cent or 1305.97 points higher at 13479.39 points to 12011.10. National Stock Exchange’s Nifty was locked at 4203.30, higher by 14.48 per cent or 531.65 points.

Market experts views:
“Markets had previously worried that gains by leftist and smaller regional parties would weigh on the reform agenda and lead to a further blow-out in the already large fiscal deficit. In previous elections, both BJP- and Congress-led alliances had been unable to push through reforms, held down by allies with their own agendas. The government's rural jobs program and strong private sector investment have highlighted the positive effects of economic reform and liberalisation, and voters' shunning of smaller parties imply a desire for greater action on the reform front,” said a Moody’s Economy.com report
The report added, “Despite the strong endorsement from voters, the government is likely to have a tough job pushing through some much-needed reforms. Political constraints mean a scrapping of fuel subsidies are unlikely, nor reforms to outdated labour laws that constrain hiring and create high firing costs. Returning to the path of fiscal consolidation will also be challenging if the global recession becomes protracted, while the financial crisis will mean any steps to liberalise capital flows and foreign investment will be cautious.”
Madhabi Puri Buch, MD & CEO, ICICI Securities said, “The mood of the moment is clearly upbeat. The largest and most complex election process on the planet is complete. The impact of the results on the markets is clearly positive - both in the short term and long term. In the secondary markets and the primary markets.”
“It is almost as though investors had pressed the pause button on major decisions on account of uncertainty. With the clear mandate to the new government and the strong expectation of stability for the next five years, the play button will be on. If global cues continue to be positive, the play could even become a fast forward,” Buch added.
Dinesh Thakkar, CMD, Angel Broking said, “The election results have come as a positive surprise and are expected to go down well with the markets considering that markets like continuity of government policies, mindsets and ideologies. The UPA’s 250+ tally has managed to beat the most optimistic political analyst on the street and this ‘thumping’ victory has set the stage for the Congress led UPA to come back to power. Further, the possibility that the UPA could form the government without the Left will further soothe investors’ nerves. The markets are expected to rally as fresh money from FIIs and those waiting on the sidelines on account of the political uncertainty, makes its way into Indian stockmarkets. Investors must remain ‘long’ on India to take advantage of the long-term wealth creation opportunities that Indian stockmarkets have to offer.”