Indian stock markets soar to record highs on election optimism

The Bombay Stock Exchange’s (BSE) 30-share Sensex commenced trading at a record peak of 75,655.46, up 245.07 points or 0.32% from the previous close. The broader National Stock Exchange’s (NSE) Nifty 50 index also climbed 81.85 points or 0.36% to open at an unprecedented high of 23,038.95.

| Updated: 27 May, 2024 3:35 pm IST

NEW DELHI: India’s major stock market indices, the Sensex and Nifty, opened at all-time highs on Monday, driven by positive sentiment surrounding the ongoing general elections and an increase in investments from foreign institutional investors (FPIs).

The Bombay Stock Exchange’s (BSE) 30-share Sensex commenced trading at a record peak of 75,655.46, up 245.07 points or 0.32% from the previous close. The broader National Stock Exchange’s (NSE) Nifty 50 index also climbed 81.85 points or 0.36% to open at an unprecedented high of 23,038.95.

Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd., speaking to a daily, attributed the bullish market sentiment to investor confidence in the election outcome and a drop in crude oil prices to $77 per barrel. “Despite the U.S. markets being closed for Memorial Day, Nifty buyers remain optimistic, buoyed by the general elections and lower oil prices,” he said.

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However, Tapse cautioned traders to brace for potential volatility this week due to several key catalysts, including exit polls (June 1), May derivatives expiry (May 30), U.S. GDP data (May 30), India’s GDP figures (May 31), U.S. PCE inflation data (May 31), and May auto sales numbers (June 1).

V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, speaking to a daily noted another positive factor for the market – a sharp decline in foreign institutional investor (FII) selling. According to data from the National Securities Depository Limited (NSDL), FIIs had sold equity worth Rs 22,046 crore through May 24, with massive cash market selling of Rs 33,460 crore.

This outflow was attributed to the outperformance of Chinese stocks and election-related jitters due to low voter turnout in the initial phases. However, Vijayakumar stated that the situation is slowly changing in favor of the ruling dispensation, with the base case scenario appearing to be a clear verdict in favor of the BJP/NDA coalition.

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“As clarity emerges on the election front, FIIs are likely to buy in India since they cannot afford to miss the post-election results rally. The rally may begin even before the election results,” he said.

Last week, the Sensex and Nifty surged to new peaks, driven by a higher-than-expected dividend payout by the Reserve Bank of India (RBI) to the government for the fiscal year 2023-24. The bumper surplus transfer of Rs 2.11 lakh crore boosted investor sentiments, as it will help the government narrow the fiscal deficit for FY2025 in the 0.2-0.4% range, according to market experts.

On Monday, the NSE stocks that gained the most included Divi’s Laboratories Ltd, Adani Ports, Hindalco Industries, Tata Steel, and NTPC Ltd.

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