Benchmark indices rose to record highs after the exit poll results, with shares of state-run enterprises leading the gains on June 3.
Market experts are predicting a political and policy continuity - as being captured in the exit polls - leading to the continued outperformance of these public-sector shares.
The PSU indices too jumped to fresh highs, in tandem with record highs being seen on benchmark Nifty 50 and Sensex.
The Nifty PSE index climbed over five percent to a record high, with HPCL, Power Grid, REC, and PFC each rallying more than six percent in early morning trade on June 3.
The Nifty PSU Bank index raced ahead of both the private bank and Bank Nifty indices, rising 4.5 percent to a fresh record in early morning trade. Bank of Baroda, SBI and Indian Bank were the top gainers in the public bank index.
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On June 1, most exit polls showed Prime Minister Modi’s BJP-led NDA government getting re-elected with over 350 Lok Sabha seats - either meeting or beating most brokerages’ bull case scenarios for the stock market.
Stocks heavily influenced by the government's economic agenda, such as those involved in capital expenditure or public sector units (PSUs) have risen sharply over the past year, and the trend is likely to continue, say market experts.
Sustained focus on capex, fiscal consolidation could see domestic sectors - particularly infra, manufacturing, capex - outperform in the near-term, said analysts at Nomura.
Kotak Institutional Equities said that while volatility in the Indian equity market has risen slightly in the past one month, India VIX still remains at lower levels than what was observed during previous assembly elections. This indicates that market participants are less uncertain about the eventual election outcome.
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