Indian stocks surge; Sensex advances 17% on Congress win

The bulls were right. Financial markets cheered and celebrated after Manmohan Singh and Sonia Gandhi's Congress Party won nation wide elections.


India's Sensex index surged 17% Monday, forcing a halt trading for the first time ever after the daily limits where breached.

The Indian rupee appreciated 3% against the dollar and the benchmark bond yield fell 12 basis points, the most in weeks according to this Bloomberg article.

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Here is what some of the "financial experts" had to offer Bloomberg and the Financial Times (click links to access each respective article).

“Markets are euphoric,” said Rahul Chadha, the Hong Kong- based head of Indian equities at Mirae Asset Global Investment, with $46 billion in global equities. “The focus by federal and state governments on development will lead to a structural re- rating of India.”

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“The election result is extremely positive and very, very bullish,” Madhusudan Kela, head of equities at Mumbai-based Reliance Capital Asset Management, the nation’s largest money manager overseeing $18 billion of assets, said in an interview. “This will provide a government which is stable and has powers to take decisions.”

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“India is potentially looking at a decade of good reforms and growth,” said Glenn Maguire, chief Asia Pacific economist at Societe Generale in Hong Kong. “This is a pretty big outcome.

Indian's version of Enron shakes up Bombay exchange

Satyam Computer Services, one of the largest outsourcing companies in India has just reported it has been inflating profits for years, sending its shares down 80% in Bombay trading. This is hardly good news for India's financial system which is already struggling in the wake of the Mumbai (Bombay) Terrorist Attacks and due to the generally bleak economic picture in the global economy.

The Bombay Stock Exchange's Sensitive Index, or Sensex fell a record 52% in 2008. After news broke yesterday the exchange tumbled 7.3% and also sent the Rupee down. The New York Stock Exchange halted trading of shares in Satyam after news, saying it needed to review the situation.

Reuters reports, "Ramalinga Raju, founder and chairman of India's fourth-largest software services exporter, said in a statement that Satyam's profits had been massively inflated over recent years. He added that no other board member was aware of the financial irregularities at the Satyam, which in Sanskrit means "truth."

(click to access the full story from Reuters or Bloomberg)