The almost irrational exuberance of the stock markets since Friday has thankfully paused for a breather on Wednesday. The Sensex went up over a 1,000 points since Friday when some broker/brokers were said to have made huge transactions when they allegedly got wind of a leak of one of the exit polls. Monday’s exit polls revealed that the Narendra Modi-led BJP would get a majority on its own or with its allies. But there is no gainsaying what will happen on Friday when the actual results are officially announced. For instance, in 2004 and 2009 the exit polls showed that the BJP would win handsomely, but when the actual results came it was the Congress that won hands down.
The various regulatory authorities, like Sebi and the Reserve Bank of India, and the stock exchanges have put in place systems needed to prevent chaos no matter which way the results go. If the results are in sync with the exit polls the markets could shoot through the roof; if they are not then the markets could collapse. The euphoria generated mainly by speculators in the markets, and by bookies who are playing with bets running into crores of rupees, is dangerous. Retail investors could be playing with fire if they get into the markets under these conditions. Even foreign brokerage houses have issued reports cautioning investors that the exit polls are not the real thing, recalling the debacles of 2004 and 2009. So losers on Friday cannot say they were not warned.
