Adani Group’s shares witnessed a remarkable surge in early trade on Monday, with gains of up to 15 per cent after the Bharatiya Janata Party’s (BJP) electoral triumph in the states of Madhya Pradesh, Chhattisgarh, and Rajasthan.
The rally mirrored the broader upswing in the domestic markets, fueled by optimism regarding the BJP government’s potential third term in the upcoming general elections next year.
Adani Group’s flagship entity, Adani Enterprises, hit the upper circuit limit of 10 percent at Rs 2,584.05 on the Bombay Stock Exchange (BSE) in early trade. Meanwhile, Adani Green Energy Ltd saw a climb of 14.75 percent, reaching a high of Rs 1,178.
Within minutes of trading, Adani Power Ltd witnessed a gain of 5.62 per cent at Rs 464.95. Other entities within the Adani conglomerate also experienced positive movement, with Adani Energy Solutions shares increasing by 6.61 per cent to Rs 912.55, and Adani Total Gas Ltd advancing by 6 per cent to Rs 743.30.
Adani Ports and SEZ added 4.27 per cent to Rs 862.85, supported by the company’s recording of cargo volumes at 36 million metric tonnes in November, reflecting a 42 percent YoY increase.
Adani Group’s cement companies, ACC Ltd and Ambuja Cements Ltd, observed their shares climbing up to 4 per cent, while Adani Wilmar Ltd rose by 2 per cent.
Several market analysts suggested that the BJP’s strong performance in the state elections has eased concerns about political risks leading up to the general elections in 2024.
The results indicate broad political support for the BJP and Prime Minister Narendra Modi, reinforcing early opinion polls that anticipate a clean sweep for the party, said Nomura India analysts. “These Hindi heartland states account for close to 12 per cent of the Lok Sabha (Lower House) seats and have traditionally been a strong support base for the BJP at the centre,” Nomura India added.
VK Vijayakumar of Geojit Financial Services explained that the stock market favours political stability and a government focused on market-friendly reforms. He believes that the market has already factored in a BJP victory to some extent, with a 500-point rally in the last four sessions. However, the positive sentiment is so strong that the rally is expected to continue.
“The market has already partly discounted a BJP victory with a 500-point rally during the last 4 sessions. But the mood is so exuberant that the rally will continue,” he said.
Meanwhile, Manish Chowdhury, Head of Research, StoxBox, said, “As we move closer to the 2024 general elections, we believe that the decisive win by the BJP in key states has sent a strong message to investors betting on India’s rising growth potential and position the country on a stronger footing as compared to its peers.”