The recent success of the BJP-led coalition in state elections has bolstered confidence among investors on Dalal Street. This optimism stems from the belief that the Central government is unlikely to adopt populist measures leading up to the mid-2024 Lok Sabha elections, thereby avoiding potential harm to the country’s fiscal positions.
This newfound confidence manifested on Monday as investors across categories engaged in robust buying activity, propelling the Sensex to a remarkable gain of 1,384 points. This surge, the most significant single-session increase since May 2022, resulted in the Sensex closing at 68,865. The index reached a new all-time high at 68,912 points during the session. Among the 30 Sensex constituents, 27 ended the day with gains. Meanwhile, the Nifty on the NSE also achieved a new peak at 20,702 points, closing at 20,687, marking a surge of 419 points.
Market experts attribute India’s equity markets’ positive response to the state election outcomes, noting a Sensex rally of over 1,000 points. A Balasubramanian, MD & CEO of Aditya Birla Sun Life Mutual Fund, emphasized that market approval is based on the government’s pro-growth initiatives such as infrastructure development, ‘digital India,’ and ‘Make in India.’ He highlighted the market’s focus on effective spending and sustainable policy-making rather than being driven by freebies.
The day’s rally significantly increased investors’ wealth, adding approximately Rs 7.5 lakh crore to the BSE’s market capitalization, now standing just above the historic Rs 350-lakh-crore mark.
Domestic investors led Monday’s surge, net buying stocks worth about Rs 4,800 crore, while foreign funds infused nearly Rs 2,100 crore, according to BSE data. In November, foreign funds net bought stocks worth Rs 9,001 crore, whereas this month, the figure stands at about Rs 17,500 crore.
The market cap of the Bajaj group surpassed Rs 10 lakh crore during the rally, making it the fifth business group to achieve this valuation milestone.
Among Sensex stocks, HDFC Bank, ICICI Bank, and L&T played a significant role in the index’s gains, while marginal selling in Wipro, Tata Motors, and Titan limited the overall positive impact, according to BSE data.
From a technical perspective, experts suggest that the market is poised for further upside potential, with the Nifty potentially nearing the 21,000 mark and the Sensex surging beyond the 70,000-level. Rupak De of LKP Securities highlighted the Nifty’s position above the critical resistance level of 19,850, expressing a highly bullish sentiment. Any downside risks are considered if the index falls below the 20,400 level, while on the higher end, the index might move towards 21,000, as noted in De’s communication to investors.
