Gujarat Inc rides the Modi wave

If it's Santa effect on global markets, it's Modi effect for Gujarat-based companies on Monday, the day after Narendra Modi-led Bharatiya Janata Party swept assembly polls. "Continuity of the policies of the ruling BJP has played a major factor," says senior analyst at Anagram stockbroking Devarsh Vakil.

"The Modi government had been hardselling the state as the number one destination for investment. With the government coming back to power, the investor community feels that the efforts to make Gujarat an investor-friendly state will continue, The high growth rate will be maintained with newer projects coming up in the state," he added.

Be it infrastructure, power, FMCG, agriculture, capital goods, textile or state PSUs, scrips of the companies based out of Gujarat shot up registering a 3-14% jump. The recently-listed Mundra Port and SEZ scrip surged 10% closing at Rs 1,156. During intra-day trading, the Mundra Port scrip traded at an all-time high of Rs 1,192.

Companies like Adanis, Nirma and Torrent have been alert to various state government initiatives and hence the investors confidence in these group companies. Analysts feel that companies, especially those engaged in the infrastructure business like roads, power, ports and canal development will benefit. "Construction boom will help performance of steel and cement companies. Hotel, entertainment and retail too will see better days," says investment strategist Paresh Gordhandas.

Bharuch-based Sanjay Dalmiya group company GHCL scrip recorded a big jump of 13.70%. The scrip closed at Rs 199.24. It touched its year-high of Rs 208.40 on Monday. Other companies that witnessed huge momentum in their scrips included Welspun India ( 5.71%), Adani Enterprise (5%), Sun Pharma (4.79%), Gujarat Apollo (4.14%), Gujarat Ambuja Exports (3.58%) and Torrent Power (3.15%).

Not only large-caps, but mid-caps and small-caps too performed well. Aarvee Denim ( 3.14%), Alembic (2.86%), Nirma (2.63%), Gujarat Gas (2.39%), Gujarat NRE Coke (1.43%) and Arvind Mills (0.7%). The scrip of Gujarat NRE Coke was expected to do better as coke prices are ruling high and the company has just completed the acquisition of the Australia-based Elouera mine from BHP Billiton a part of the Illawarra Coal Business.

The company will start mining from February. A few companies whose performance was not in tune with the leaders included Ganesh Housing Corporation, Atul, United Phosphorous, Ratnamani Metals and Torrent Pharma.

Says former president of Ahmedabad Management Association Rajiv Vastupal: "It's a boost to the self-confidence of the business community with BJP retaining power. The clean image of the government raises optimism that corruption would further come down and the efficiency of the government machinery will increase."