The role of politics in India came full circle to remind investors in the country that the narrow understanding of economics is just not enough if one ignores the role of politics in the construction of financial fortunes.
And the proof of the above came in full measure on Monday 18th may 2009 with a skyrocketing force never witnessed in the history of the markets anywhere in the world as stocks, bonds and the Indian rupee went into orbit on the back of the pleasantly dramatic mandate for Manmohan Singh and the Indian national Congress.
It was therefore the first ever instance that the Bombay Stock exchange which was founded in the year 1875, had to halt trading for the day when the 30-scrip sensex roared by 2111 points or a mind boggling 17.3% inside the space of a minute, making investors richer by over 3.6 lakh crore. In both percentage and absolute terms, the gallop was a record smashing performance, blunting the earlier single day rise record of 1140 points on January 25 2008. The picture was no different on the National Stock exchange with the rise being marginally sharper on the Nifty at 17.7%.
The sensex which fell from over 21,000 points since January 2008 to below 8000 points in October 2008 had regained around 26% from the beginning of 2009 till the eve of elections and has now extended its gains overnight to 48% taking it from last to first among the BRIC nations( Brazil, Russis, India and China) and pole vaulting it into the best performing index in the world, barring Peru.
The whole euphoria seems to be due to the fact that the Congress government received a powerful mandate, leaving the Left decimated and incapable of coercing the ruling combination to succumb to Leftist agendas. With the government no longer dependent on coercive allies, a stable government is expected to push reforms with PSU disinvestments, liberalisation in FDI policies, private entry pension funds and possible labour reforms as well.
What happened to the stock markets on "Golden Monday' was therefore anticipated though not to the measure that it finally weighed. The upper circuit filter was hit in seconds after the market opened at 9.55 am climbing vertically by 17980 points on the sensex from Fridays close.Trading was therefore halted within seconds holding the sensex at 13,963 points between 9.56 am till 11.55 am. Thereafter , the moment trading resumed, the index jumped by another 652 points which left traders and investors with a pleasant daze.
Brokerage houses in Goa as in the rest of India had suddenly a splurge of telephone callers who were dumbstruck to believe the indulgence of the stock markets in a single day. Most of the brokerage houses in Goa as in the rest of the country however had almost nil business today since the markets hardly allowed anyone to enter the ring with the circuits hitting faster than the blinking of an eyelid.