Reaction to the exit polls
Even before the official results came out, Indian indexes and India-focused ETFs reacted strongly to exit poll results.
Exit poll results were released by various media houses and research firms on Saturday, May 19, when the voting for all seven phases ended. Most of the exit polls showed Modi to be back in power with a clear majority for the National Democratic Alliance (or NDA) led by his BJP. Of the eight exit polls we considered, seven projected a clear majority for the NDA. The average of all these eight polls gave 301 seats to the NDA, well above the threshold of 272 required to form the government.
On Monday when the markets opened to the news of exit polls, India’s NIFTY 50 and BSE SENSEX gained 3.69% and 3.75%, respectively. The WisdomTree India Earnings ETF (EPI), the iShares India 50 ETF (INDY), and the iShares MSCI India ETF (INDA) gained 4.69%, 4.43%, and 4.42%, respectively.
Reaction on the counting day
The final results only bettered the exit polls as Modi’s BJP and the NDA coalition both won substantially more seats than predicted by the average of exit polls. While both the NIFTY 50 and the S&P BSE Sensex hit record highs in early trade on May 23 when the trends started pouring in, both the indexes ended in red that day as trade war worries gripped Asian stocks. The three India-focused ETFs also followed suit.