Mumbai: Indian stocks hit fresh 2019 highs on Monday after opinion polls predicted that the National Democratic Alliance (NDA) is likely to form the next government.

The BSE Sensex rose 382.67 points, or 1.04%, to 37,054.10, while the National Stock Exchange’s Nifty gained 1.2% to 11,168.05. The indices are now at a six-month high.

Opinion polls by two agencies—ABP C Voter and India TV CNX—showed NDA having an edge.

“Since many stocks are available at cheap valuation, investors rushed to high quality mid- and small-caps to participate in the pre-election rally," said Vinod Nair, head of research at Geojit Financial Services Ltd.

BSE Midcap and Smallcap indices gained more than 1.5%, as investors scooped up beaten-down stocks with reasonable valuations.

Investor sentiment has revived, with mid- and small-caps rallying in the last few weeks, said Jagannadham Thunuguntla, head of research (wealth) at Centrum Broking Ltd. “The markets have seen broad-based robustness, with buying interest visible across sectors. FIIs have continued their relentless aggressive buying, triggering a pre-election rally. February and March 2019 have seen FII inflows to the tune of 20,000 crore."

“As border tensions appear to have cooled off, and global central bankers turned pro-liquidity, Indian markets are in risk-on mood," he added.

After several months of aggressive selling, FIIs have returned to India, on hopes of easing monetary policy and a stable central government. According to Sebi data, FIIs bought $2.37 billion in stocks in February, their biggest purchase since November 2017. However, there was a slowdown in domestic liquidity, which was driving the markets, while foreign funds were away. Net flows into equities, including those linked to savings scheme funds, fell to 5,122 crore in February after hitting a 24-month low of 6,158 crore in January, according to the Association of Mutual Funds in India.

Assembly elections for Sikkim, Arunachal Pradesh, Odisha and Andhra Pradesh will be held simultaneously with the Lok Sabha elections.

The 2019 general elections will begin on 11 April and end on 19 May, across seven phases, and the results will be announced on 23 May. 

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