A slew of stocks, which have tracked the political fate of Narendra Modi, fell while India voted but rebounded after exit polls predicted the prime minister would win his re-election bid. Companies controlled by billionaires Gautam Adani, such as Adani Enterprises Ltd. and its units, as well as Mukesh Ambani’s Reliance Industries Ltd. and Anil Ambani’s Reliance Infrastructure Ltd. have gained. The firms have operations in or other links with the state of Gujarat, where Modi served as chief minister for a decade before he swept national elections in 2014. The stocks had also rallied following Modi’s victory five years ago and dropped in December when his party lost local state elections.
With official results of the national vote due Thursday, the fate of these stocks lingers on how closely the exit poll trends bear out. Most forecasts show that Modi’s Bharatiya Janata Party-led alliance will win between 277 and 350 seats, well above the 272-seat majority mark. A significant shortfall — or surprise loss — would probably trigger a sharp correction in financial markets.
The exit poll predictions have comforted investors concerned about Modi’s ability to repeat his landslide 2014 win amid a resurgent opposition, farm distress and a job crisis.
Investor concerns were reflected in the performance of Adani Enterprises, which lost almost a quarter of its worth in the past six months through last week. The stock had doubled in value during the six-month run-up to Modi’s electoral sweep five years ago. The resource conglomerate is also benefiting from Prime Minister Scott Morrison’s surprise election victory in Australia, which is seen as a win for the coal industry.
Chairman Adani is a Gujarat native and runs the state’s biggest port. He’s said in the past that he doesn’t receive nor expect any special treatment from Modi.
Mukesh Ambani is the chairman of Reliance Industries, which operates two refineries at Jamnagar in Gujarat. His brother, Anil Ambani, is accused by opposition parties of being favoured by Modi for key defence contracts. Anil Ambani’s representatives have denied wrongdoing and the group on Tuesday said the statements were made “for political purposes” in the run-up to the elections.
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