India stocks at all-time high

India's stock markets rallied Friday as hardliner Narendra Modi and his pro-business party won the national poll, the clearest election victory the country has seen in 30 years.

After preliminary results showed a majority for the Hindu nationalist Modi and the Bharatiya Janata Party (BJP), the benchmark Sensex climbed more than 6 percent to an all-time high of 25,375 points before tapering those gains and closing 0.9 percent up.

The National Stock Exchange's flagship index, the Nifty, also hit record levels of 7,563 points before retreating to close 79.85 points, or 1.12 percent, higher than it had opened.

Ahead of the elections, expectations of a strong mandate for the opposition BJP party had buoyed stocks and bonds, fueling year-to-date stock market gains of 14 percent and allowing the rupee's exchange rate against the dollar to rise by 4 percent.

Buying into the Indian election story

Traders seemed to be fuelled by hopes that the new BJP government would implement sorely needed reforms in the poverty-ridden country, in which more than half of the 1.2 billion-strong population is under the age of 25.

But the Indian economy is growing at its slowest pace in a decade and is still smarting after years of weak leadership and corruption scandals.

As company earnings remain weak and food prices continue to rise, some experts believe it is too early for optimism, especially considering India's poor track record on reform.

"There's a very tough task ahead that will take time to resolve, the economic problems are quite acute," said D. K. Joshi, chief economist of credit rating agency Crisil. "There's no magic wand."

cjc/ng (Reuters, dpa)