India shares soar 6pc in salute to Modi win, then retreat

MUMBAI, May 16, 2014 (AFP): India's benchmark stock index soared over six percent to a record high Friday after right-wing opposition leader Narendra Modi scored a landslide election victory, and then pulled back on profit-taking.
The Bombay Stock Exchange index, known as the Sensex, climbed 6.15 percent to 25,375.63 points as results showed Modi and his Hindu nationalist Bharatiya Janata Party (BJP) on track for a parliamentary majority after the marathon staggered poll.
But the Sensex then ave up a big chunk of its gains to close up just 0.90 percent at 24,121.74 points.
"The Sensex gave the election results a booming salute early on and then did what markets usually do -- which is to look at the road ahead," Alok Churiwala, head of Churiwala Securities in Mumbai, told AFP.
Even though Modi has won an impressively strong mandate, economic recovery is "likely to be protracted", said HSBC economist Leif Eskesen.
The economist expects India's growth to pick up only marginally to 5.3 percent in the current financial year from an estimated 4.9 percent last year -- half the rate notched up during India's boom times.
"The market will take a breather. Global economic signs are also not good," Churiwala added.
But Churiwala believes the undertone of the Indian market is now bullish and the Sensex could surge to a record 26,500 points in a few months.
Modi rode a wave of voter support with his message of jobs, development and economic revival.