BSE Sensex Trading Suspended for 26% Climb After UPA Election Win

by Ravi Dixit | May 17, 2009 at 10:34 pm

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India's Bombay Stock Exchange Sensex continues to be up nearly 320 points (2.23%) at 14,603 as the markets were overjoyed with the thumping victory of Congress led UPA in the 2009 Parliamentary election.

The one-sided win for the UPA government (lead by 262 seats) in the 15th Lok Sabha election, which shrugged off the exit polls results drastically, brought great cheers for the markets in early trade. The benchmark indices locked at upper circuit.

The Congress-led alliance is projected to win 260 seats, with rivals the BJP on 157. This confounded projections of a close election.The communist parties, who had blocked reforms in insurance, pension funds and the selling off of state-owned companies, lost more than half their parliamentary seats.Shares in some of India's largest companies also climbed. Reliance gained 37% and ICICI Bank jumped 25.3%, while carmaker Tata gained 40% and IT firm Infosys rose 9.8%.The Sensex had climbed 26% already this year before the Congress Party victory was declared over the weekend.

Markets hit upper circuit within a minute of opening on Monday in reaction to UPA's phenomenal win at the general elections. All sectoral indices surged with banking spearheading the rally.

Total market turnover (BSE+NSE) was only Rs 3,100 crore - indicating that money waiting on the sidelines, as predicted by all veteran market participants, could not participate today, and the rally may continue for some more sessions.

In case of a 15% movement of either Sensex or the NSE S&P CNX Nifty on or after 2 p.m. the trading will halt for the remainder of the day.

It is a system to curb excessive speculation in the stock market, applied by the stock exchange authorities, when the index spurts or plunges by more than a fixed limit. Trading is then suspended for some time to let the market cool down.