Indian rupee, bond price rises after BJP-led Mahayuti Alliance’s big Maharashtra win

Bond and Indian rupee

The Indian rupee opened higher on November 25, supported by a firm trend in domestic equities, and bond yield dropped after the BJP-led Mahayuti Alliance’s landslide win in Maharashtra assembly polls, the result of which were declared over the weekend.

The rupee opened at 84.37 against the US dollar after closing at 84.46 in the previous trading session.

The 10-year benchmark yield opened down at 6.8268 percent from 6.8710 percent in the previous session. Bond yield and prices are inversely proportional, when yield falls price increases and vice versa.

The stock rally was driven by the BJP-led alliance returning to Maharashtra with a bigger mandate, boosting confidence of market participants.

The BJP-led alliance got 230 seats in the 288-member assembly of India’s richest state, bringing in renewed focus on infrastructure development.

This is the best-ever performance by a party/alliance in Maharashtra since 1990. The BJP has bettered its previous high of 122 seats won in 2014 state elections.

This has also boosted confidence of investors in the equity market, especially PSU stocks.

At 10.46 am, the Sensex was up 1231.99 points or 1.56 percent at 80,349.10 and the Nifty was up 407.20 points or 1.71 percent at 24,314.45.

PSU bank, realty and auto indices led the rally, surging up to 4 percent. Stocks like SBI, Bank of Baroda, PNB, and Canara Bank lifted the index higher.

Kranthi Bathini of WealthMills Securities attributed the buying interest in banking stocks to their attractive long-term relative valuations.

Auto majors such as M&M, Maruti Suzuki and Tata Motors powered the gains. India VIX, the market’s fear gauge, edged lower around the 16 mark, boosting sentiment.