Sensex jump over 3.5% on optimistic exit poll results, Nifty crosses 23,300 points

Domestic equity indices opened at record highs on Monday after exit polls predicted a hat-trick for Prime Minister Narendra Modi in the results of the recently concluded Lok Sabha elections. Analysts said better than expected gross domestic product (GDP) of 8.2% in FY24 and S&P revising India’s rating outlook to positive from stable also buoyed the market.

BSE Sensex crossed the 76,500 mark for the first time on Monday. The 30 share index opened 2,621.98 points or 3.55% higher at 76,583.29. Nifty opened at a record high of 23.337.9 with a gain of 807.2 points or 3.58%.

An average of 10 exit polls has predicted that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) will improve its position in 2019 by winning more than 350 seats. According to estimates, the number of seats of the opposition India Bloc wills 107 to 201.

“Exit polls are indicating an easy victory for NDA/BJP in India’s parliamentary elections. Although the surveys are not the same as the final results, we see almost certainty of a third term for the Narendra Modi government, with the BJP getting a simple majority on its own (numbers may change in the final results),” said Sheshadri Sen head of research and Strategist, MK Global Financial Services.

“Macro-financial stability and a focus on capital expenditure, investment and manufacturing should sustain the multi-year bullish trend in Indian equities,” Sen said. Market experts said several sections of investors had taken short positions in the market and after exit polls predicted a victory for the ruling BJP, those positions are being covered by investors in the market. While FPIs having long positions in the market had taken some short positions to reduce their risk in case of an adverse election outcome, there was another group of investors who had also taken short positions in line with their expectation that the BJP will come to power on its own. I can’t come. And there may be a need to form a coalition to form the government, it was said.

“It is rare in the market to have fundamentals, technicals and sentiments at the same time. Now this is what has happened. VK Vijayakumar, chief investment strategist at Geojit Financial Services”, said the market went very lightly on the big event, the elections, with the Nifty down almost 600 points from May’s high.

He said, “Profit booking also took place on a large scale.” There are also more short positions in the market. This is all about to change dramatically. DII, HNI, retail are all going to be buyers. “Short covering may increase momentum,” he said.

The Indian equity market has seen a modest increase in volatility over the past month, but India’s VIX is still lower than seen during previous elections, indicating uncertainty among market participants about the election outcome, Kotak Institutional Equities reported.

In early morning trade, India VIX was hovering at 20.22 compared to the previous close of 24.6. Some major indices also opened on the rise on Monday. Nifty Midcap opened 3.52% up at 14,951.85. Nifty Bank crossed the level of 50,000 for the first time. It opened at 1905, up nearly 4%, at 50,889.85.

Market participants witnessed heavy buying from domestic institutional investors (DIIs) and foreign portfolio investors (FPIs), who sold Indian equities worth a net Rs 23,364 Crore in May.

“FPIs cannot sit on the sidelines when domestic institutional investors are buying. We hope that FPI inflow will remain strong in future also.

NSE companies that grow the most in morning trade incorporated Adani Ports, Adani Enterprises, Power Grid Corporation of India and NTPC Limited.

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