Indian shares rose on Monday, tracking Asian peers that climbed on positive U.S. payrolls and Chinese trade data, with investors continuing to bet on a possible win for the country’s ruling party in a key state election.

Markets are hoping for a big success by Prime Minister Narendra Modi and his ruling Bharatiya Janata Party in assembly elections in Gujarat, with tens of thousands voting in the first stage of the polls on Saturday.

A victory would help boost the government’s re-election prospects during general elections in 2019 and reinforce its reform agenda, although analysts said it was already being priced into markets, making the margin of a win crucial to further boost shares.

Three recent big polls have predicted a victory for Modi’s party, but with a greatly reduced majority. “If BJP wins, it’s definitely good for the markets, but unless they win by a landslide like they did in Uttar Pradesh and surprise everyone, markets (NSE index) should remain rangebound in the 10,000-10,500 levels,” said R.K. Gupta, managing director at Taurus Asset Management Company.

The broader NSE Nifty was up 0.30 percent at 10,296.35 as of 0619 GMT, while the benchmark BSE Sensex was 0.35 percent higher at 33,365.35. The gains also tracked a 0.4 percent increase in Asia shares ex-Japan after strong U.S payrolls data and better-than-expected Chinese trade data on Friday.

The PSU bank index rose as much as 1.7 percent, with constituent State Bank of India up as much as 2 percent. Private sector lenders Axis Bank and HDFC Bank were up about 0.5 percent each.

Property developer Unitech Ltd rose as much as 19.2 percent after a court allowed the government to take over management control of the debt-laden company on Friday.

 

Source: BusinessWorld