Reliance, financials lead surge in Indian shares ahead of election results

People walk past the Bombay Stock Exchange (BSE) building in Mumbai

By Bharath Rajeswaran

MUMBAI (Reuters) -Indian shares surged on Monday, led by financials, index heavyweight Reliance Industries and energy stocks, after exit polls projected a third term for Prime Minister Narendra Modi's government in the recently concluded general elections.

The NSE Nifty 50 rose 3.25% to 23,263.90 points, while the S&P BSE Sensex added 3.39% to 76,468.78, with both the blue-chip indexes logging record high closing levels and posting their best session in 40 months.

Exit polls released on Saturday projected the Bharatiya Janata Party-led National Democratic Alliance will likely get a two-third majority in the 543-member lower house. The final results are due on June 4.

"The exit poll results have boosted the sentiment in Indian equities," said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities, adding that foreign portfolio investors will turn buyers of Indian equities after results.

FPIs offloaded Indian shares worth 255.86 billion rupees (about $3 billion) in May.

Highest-weighted financials advanced 4.04%, while state-owned lenders surged 8.4%, the top percentage gainer among the 13 major sectors.

Fourteen of the Nifty 50 stocks hit record highs on the day. Reliance Industries, the second-heaviest index stock, surged 5.59% and hit a record high.

"Large-caps, especially financials, have gained due to relatively attractive valuations over broader markets, while a similar valuation comfort coupled with cooling off in bond yield has triggered buying interest in state-owned banks as well," Agrawal said.

Energy and oil & gas also gained about 7% each.

Data on Friday, which showed the economy grew a better-than-expected 7.8% in the January-March quarter, also helped lift sentiment.

Forty-three of the Nifty 50 stocks logged gains, with Adani Ports and Adani Enterprises jumping 10.2% and 6.86%, respectively. Adani Ports was the top Nifty 50 gainer.

State-owned power companies NTPC and Power Grid climbed about 9% each, hitting record high levels.

State Bank of India , the country's largest public lender, also jumped 9% to a record high.

($1 = 83.1388 Indian rupees)

(Reporting by Bharath Rajeswaran in Mumbai; Editing by Varun H K and Sonia Cheema)