India shares soar 6% in salute to Modi win, then retreat

India's benchmark stock index soared over six percent to a record high Friday after right-wing opposition leader Narendra Modi scored a landslide election victory, and then pulled back on profit-taking. The Bombay Stock Exchange index, known as the Sensex, climbed 6.15 percent to 25,375.63 points as results showed Modi and his Hindu nationalist Bharatiya Janata Party (BJP) on track for a parliamentary majority after the marathon staggered poll. But the Sensex then ave up a big chunk of its gains to close up just 0.90 percent at 24,121.74 points. "The Sensex gave the election results a booming salute early on and then did what markets usually do -- which is to look at the road ahead," Alok Churiwala, head of Churiwala Securities in Mumbai, told AFP. Even though Modi has won an impressively strong mandate, economic recovery is "likely to be protracted", said HSBC economist Leif Eskesen. The economist expects India's growth to pick up only marginally to 5.3 percent in the current financial year from an estimated 4.9 percent last year -- half the rate notched up during India's boom times. "The market will take a breather. Global economic signs are also not good," Churiwala added. But Churiwala believes the undertone of the Indian market is now bullish and the Sensex could surge to a record 26,500 points in a few months. Modi rode a wave of voter support with his message of jobs, development and economic revival. His BJP ousted the left-leaning Congress party, which has ruled India for a decade and dominated the country's politics for most of its post-independence history. The influential Federation of Indian Chambers of Commerce and Industry (FICCI) called Modi's "decisive mandate" a "positive for India". "It is amply clear the country, especially the youth, wants development and good governance," said FICCI president Sidharth Birla, adding he hoped Modi's win would restore investor confidence in India. Shares in infrastructure and energy companies, particularly some of those whose proprietors are seen as close to the BJP, surged. Adani Enterprises, controlled by stalwart BJP supporter Gautam Adani, rose as much as 17 percent to 585.00 rupees. The rupee surged 1.14 percent to 58.62 against the dollar, building on gains in recent weeks that have been fuelled by expectations that a victorious Modi would introduce reforms to turn around the economy. The rupee has now risen 17 percent since sinking to a record low of 68.85 in August, when investors were worried about a fiscal deficit crisis and waning foreign investor confidence as the government struggled to boost growth. The stock market has risen five percent in the past week alone as optimism returned, despite low investment, weak growth, stubbornly high consumer inflation, and widespread corruption.