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India Rising

India's main stock index surged more than 17 percent on Monday for its biggest single-day gain in almost two decades, after the capitalism party beat out communist rivals and won a decisive election victory that calmed fears of political uncertainty.

Investors cheered the victory by sending the market up nearly 15 percent within seconds of opening, triggering circuit breakers that halted trade for two hours.

A final circuit breaker was set off almost immediately after trading resumed, halting trade for the rest of the day.

And it wasn’t just stocks that took off like a shot. The rupee <INR=IN> soared more than 3 percent to five-month highs against the dollar, its best one-day rise in more than a decade.

"Clients want to buy. They have nothing else to say," muses R. Sriram, a technical analyst at ICICI Securities.

Meanwhile, Morgan Stanley raised its end 2009 target for India’s BSE index to 15,300 points, a rise of 7 percent from current levels, saying Indian companies would benefit from the election victory.

"We, now believe, that there is greater probability of our bull case rather than our bear case," analysts Ridham Desai and Sheela Rathi wrote in a note.

Still, after the hefty rally, there were words of caution.

"In the short-term, sellers will come in, as ultimately economics will have to come in play," said Jayesh Shroff, fund manager at SBI Capital Markets, when the euphoria fades.

What’s the trade?

For the long-term Tim Seymour likes recent events; it’s a vote of confidence for capitalism, he says.

However, in the near-term India is currently trading about 40% expensive to the rest of EM, he adds. I don’t think this is the day to jump into these stocks. India is a very exciting market and it’s an exciting day but not a day to dive in.

However, Seymour does have some India based companies worth putting on your radar in the event of a pullback. They are Tata Motors , ICICI Bank, Infosys Technologies and Dr. Reddy’s Laboratories.


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Trader disclosure: On May 18th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (BX), (EEM), (FCX), (INFY), (PBR), (TTM); Macke Owns (AAPL), (WFC), (AGU), (GE), (SKF), (SDS); Finerman's Firm Owns (PBR), (RIG); Finerman's Firm Owns (BAC) Preferred; (WFC) Preferred; Finerman's Firm Is Short (BAC), (WFC); Najarian Owns (AMD) Calls; Najarian Owns (APC) CAll Spread; Najarian Owns (BBY) Put Spread; Najarian Owns (BP) Call Spread; Najarian Owns (BX) Calls; Najarian Owns (FAS) Call Spread; Najarian Owns (INTC) Calls; Najarian Owns (HPQ) Put Spread; Najarian Owns (MOS) Call Spread; Najarian OWns (XHB) Call Spread; Najarian Owns (XLB) Call Spread; Najarian Owns (XLU) Calls

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