HONG KONG (Nikkei Markets) -- Asian shares outside of Japan advanced Monday, led by Indian equities after exit polls forecast that Prime Minister Narendra Modi is set to retain power.
The Nikkei Asia300 Index of companies outside Japan rose 0.2% to 1,260.23. Indian lenders along with infrastructure companies and conglomerate Reliance Industries were among the top performers on the gauge. ICICI Bank and State Bank of India advanced by at least 4.5% each, Larsen & Toubro jumped 6.6%, and Reliance Industries added 4.7%. Indian software exporters underperformed, weighed by the gains in the Indian rupee on prospects of a Modi victory. Infosys slipped 0.2% and Tech Mahindra declined 1%.
India's benchmark equity index, the BSE Sensex, added 3.8% on Monday, its best performance in almost six years, after most exit polls predicted another term for the Modi-led National Democratic Alliance. Morgan Stanley said that out of the 13 polls they tracked, only one predicted that the ruling NDA would fall short of a majority.
"If the exit polls are right, Indian equities should stage a robust rally. For the broad market, the chances are further skewed to an upward move," it said in a note. Morgan Stanley added, however, that if the actual results departed from the exit polls and delivered a fragmented verdict, "equities could take a meaningful hit."
India's federal elections results are due on May 23.
Meanwhile, elsewhere in Asia, the focus this week will be on U.S.-China trade after Washington raised tariffs on imports from Beijing and the later retaliated by increasing duties on American shipments. Further hurting the relationship between the world's two largest economies was an executive order by U.S. President Donald Trump last week to ban the use of information and communications technology or services in the U.S. that pose "an unacceptable risk" to national security.
Trade talks between the U.S. and China "appear to have stalled," CNBC reported Friday, citing two sources briefed on the status of the negotiations. Reuters reported on Sunday that Google had suspended some business with Huawei Technologies after Trump's blacklist, making the company's phones lose access to updates of the Android operating system.
Cathay Pacific Airways dropped 1.6%. The Hong King airline said Monday that the combined April passenger traffic of the airline and its regional unit Cathay Dragon grew 4.9% on year. Ronald Lam, Cathay Pacific's director for commercial and cargo services, said that while year-on-year revenue growth for April in the passenger business increased due to the shift in Easter holiday, the overall yield declined during the month.
Dr. Reddy's Laboratories tumbled 5.8%, extending Friday's losses. While the Indian drugmaker on Friday reported a 44% increase in net profit for the March quarter, it reported a 4% sequential drop in Indian revenues and a mere 1% increase in U.S. revenue.
Index heavyweight Samsung Electronics added 1.9%, rebounding from four-month lows.
Volumes across Asia were lower than usual with financial markets in Malaysia, Singapore, and Thailand remaining closed on Monday.