The Sensex and Nifty, two major indexes of the domestic stock market, reached fresh all-time highs on Monday following the BJP’s victory in three of the four major states, which improved investor confidence and enhanced expectations for political stability following the 2024 Lok Sabha elections.
The 30-share Sensex on the BSE increased by 1,383.93 points, or 2.05%, to close at a record high of 68,865.12. The Nifty 50 finished at a record high of 20,686.80, up 418.9 points, or 2.07%.
The 30-share Sensex on the BSE increased by 1,383.93 points, or 2.05%, to close at a record high of 68,865.12. The Nifty 50 finished at a record high of 20,686.80, up 418.9 points, or 2.07%. This is the largest one-day rally for both indices in percentage terms in over a year (since October 4, 2022).
The three Hindi heartland states were won by the BJP in the Assembly elections that were announced on Sunday. Out of these, it kept Madhya Pradesh and drove out the Congress in Rajasthan and Chhattisgarh. Congress won Telangana and drove out the TRS.
Better-than-expected GDP growth in the July–September quarter, fresh interest from foreign institutional investors (FIIs), and a decline in the yield on the US Treasury 10-year bond all contributed to the market’s advance.
The market capitalization (M-cap) of the BSE’s listed companies reached an all-time high of Rs 343.48 lakh crore, or $4.11 trillion, as a result of the equity rally.
The outcome of the state elections has proven to be a significant event that may inspire fresh hope and a market rise. Markets want stable political environments and governments that are focused on enacting reforms. The outcomes exceeded expectations in terms of the market, according to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The last four sessions saw a 500-point gain for the BJP, and the market has already partially discounted that outcome. However, the enthusiasm is so great that the rally will go on,” he declared.
The market is responding favorably to the election results, according to Madhavi Arora, Lead Economist at Emkay Global Financial Services, because the BJP’s return to power in 2024 is anticipated to support long-term growth and policy continuity.
According to a research from Kotak Institutional Equities, the BJP dramatically exceeded both pre- and exit-poll estimates, which will boost the party’s chances of holding onto a majority in the Lok Sabha and the market’s belief that it will win the general elections in 2024. The market may trade at high values in the near future since “we expect election-linked market volatility to remain low,” the statement stated.
The 7.6% GDP growth in the quarter that ended in September 2023, the likelihood of an early rate decrease by the US Federal Reserve, and the decline in the yield on the 10-year US Treasury all contributed to investors’ optimism.
The most significant declines in 10-year yields were seen in the US (-13bps) and Germany (-9bps), as weak manufacturing PMI data from various areas confirmed the belief that major central banks have finished raising rates. According to a study by Bank of Baroda, analysts are even pricing in a rate drop by the Fed in H1CY24, despite recent remarks by US Fed Chair Jerome Powell to the contrary.
The likelihood of a rate cut in March is growing as the US 10-year yield, which surpassed the 5% mark a few weeks ago, dropped to its lowest point in three months and was trading around the 4.25 percent range.
The Bank Nifty index had a huge 1,600 point increase during the day, and it was able to surpass the previous high of 46,369 marks established in July 2023 to reach a new lifetime high of 46,484. According to Ajay Menon, MD & CEO, Broking & Distribution, Motilal Oswal Financial Services (MOFS), the banking index had been underperforming over the past few weeks, and Monday’s rebound had given the market additional vigor.
Bulls in the Bank Nifty staged a powerful rally, breaking all previous records and eliminating the pessimistic outlook. It is expected that the trend will continue, and the bulls will have strong support in the 46000–45800 range. The index may rise to levels of 47000–48000 as a result of the current momentum gain, according to Kunal Shah, Senior Technical & Derivative analyst at LKP Securities.
On Monday, FPIs acquired Rs 2,073.21 crore of domestic shares, according per the BSE’s provisional statistics. National Securities Depository Ltd (NSDL) data shows that foreign institutional investors (FIIs) had purchased Indian shares for a total of Rs 15462 crore in December, compared to Rs 9,001 crore in November.
The market surge on Monday was the largest one-day increase for both benchmark indices since October 2022, expressed in percentage terms. With FPIs spearheading the purchasing impulse, the surge has the ability to catapult indices higher, say analysts.
