Exit poll euphoria wanes, dragging India stocks down

Bloomberg

Indian equities fell, reversing gains that pushed key indexes to a record, as euphoria around exit polls that predicted Prime Minister Narendra Modi’s re-election ebbed.
The benchmark S&P BSE Sensex dropped 1 percent to 38,969.80 in Mumbai, after rising to a high earlier in the day. The NSE Nifty 50 Index declined by same magnitude.
Many investors are of the view that local stocks have already priced in Modi’s re-election and the extended rally has been overdone.
The MSCI gauge of Indian shares trades at almost 18 times its estimated one-year earnings compared with the MSCI Emerging Market Index’s 11.5 times. The national election vote count is on May 23.
“Given that the numbers are better than the base case discounted in markets, we would expect at least a modest rally if the official results are not materially different from exit polls,” said Sriyan Pietersz, an investment strategist at Matthews Asia in Singapore.
Seventeen of the 19 sector indexes compiled by BSE Ltd retreated, paced by a gauge of automakers. Twenty-eight of the 31 Sensex members and 43 of the 50 Nifty companies declined.
Tata Motors Ltd dropped 7 percent, the steepest among Nifty members, even after reporting a January to March net income that topped analyst estimates. The company’s Jaguar Land Rover unit cut its profit margin and cash flow outlook, according to an investor note from Jefferies India Pvt.
Net incomes at 24 of the 37 Nifty companies that have reported earnings so far have either topped or met the analyst estimates, according to data compiled by Bloomberg. The NSE Volatility Index jumped 8.4 percent, rebounding from Monday’s 16 percent plunge.