The BJP-led National Democratic Alliance (NDA) is projected to form the government at the Centre with exit polls giving between 249 and 290 seats to Narendra Modi-led government, which is close to the half-way mark in the 543-member Lok Sabha.

A majority of 272 is needed to form a government, although that is often achieved with outside support from regional parties. The official results will be out on Friday.

Stock markets have in recent days hit record highs on hopes that the exit polls would show the BJP and its allies winning a majority, boosted by both Modi's pro-business image and the prospect of an end to the coalition governments that have slowed the pace of reform in recent years.

The benchmark BSE Sensex and Nifty index  hit an all-time high and the rupee touched its strongest levels in 10 months on Monday.

Similar market sentiments continued during the opening trade on Tuesday. Several analysts expect the rally to continue through the week.

"The implications of a strong NDA government at the Centre are that the quality and composition of the capital flows will improve," said Rupa Rege Nitsure, chief economist at Bank of Baroda.

If Modi falls short of a majority when the results come in on May 16, he will need to strike a coalition deal with some of India's increasingly powerful regional parties.

Here is a brief outlook of what economists and financial experts have to say on these political developments.

A. PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI: I think exit polls in India need to be taken with a pinch of salt. However, looking at the tally, I expect the positive sentiment in equity market to continue on Tuesday. There could be a limited rally in bonds as most of the rally has already happened on expectations of a stable government.

NAVNEET MUNOT, CHIEF INVESTMENT OFFICER, SBI MUTUAL FUND, MUMBAI: Although it has got discounted by some stretch, the announcements (on exit polls) will provide a boost to markets. Volatility would be there, but broad uptrend remains intact. I think cyclicals, industrials, consumer discretionary, broadly sectors tied to domestic economy have been outperforming.

JK JAIN, HEAD OF RESEARCH, KARVY STOCK BROKING LTD, MUMBAI: At this juncture we can't rule out more support coming for the NDA from other smaller regional parties which has not taken a stance on supporting either NDA or UPA. We expect Nifty .NSEI to open gap-up in tomorrow's trade and gain by 3-4 percent to around 7300 levels before the election results are announced.
Long-term investors can wait for the actual election results and increase their exposure to equities significantly.


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