- The Indian stock market benchmarks—the Nifty 50 and the Sensex—soared to unprecedented levels in early trade on Monday, June 3, following a majority of the exit polls predicting on Saturday, June 1, that the Bharatiya Janata Party (BJP)-led NDA may secure over 350 of the 543 seats in the Lok Sabha elections 2024.
- The Indian stock market overcame election-related uncertainties as exit poll results forecasted the return of the BJP-led NDA to power with a substantial majority. Sensex opened 2,622 points higher at 76,583.29 against its prior close of 73,961.31 and surged 2,778 points, or 3.8 per cent, to hit its new record high of 76,738.89. The 30-share pack ultimately closed with a hefty gain of 2,507 points, or 3.39 per cent, at 76,468.78, with 25 stocks in the green.
- The Nifty 50 opened 807 points higher at 23,337.90 against its earlier close of 22,530.70. It increased 808 points, or 3.6 per cent, to reach its fresh record high of 23,338.70 in early trades. The Nifty 50 closed at 23,263.90, up 733 points, or 3.25 per cent. Investors engaged in a hectic buying spree across segments, with the midcap and smallcap indices also rising to new record highs, each surging nearly 4 per cent.
- The BSE Midcap index hit its new all-time high of 44560.97 during the session but closed 3.54 per cent higher at 44,367.67. The BSE Smallcap index reached its fresh record high of 48,973.96 during the session and finally settled with a gain of 2.05 per cent at 48,232.30. Nearly 300 stocks, including SBI, ICICI Bank, Axis Bank, Bharti Airtel, Larsen and Toubro, Mahindra and Mahindra, NTPC, and Power Grid, hit fresh 52-week highs in intraday trade on the BSE on Monday.
- In May, the Nifty 50 and Sensex ended their three-month winning streak, closing in negative territory due to increased volatility driven by election-related uncertainty. The volatility index India VIX surged 91 per cent in May. Although the exit poll results were the main catalyst, experts have identified three additional factors that may have bolstered stock market sentiment.
- Nifty has opened with a gap up primarily on the back of the exit poll numbers indicating a clear victory for the BJP-led NDA government for the third consecutive time. In addition to this, there were a few other elements which pushed the index higher, such as better-than-expected GDP numbers, a strong rebound in US markets on Friday, the arrival of monsoon, and a reduction in fiscal deficit,” said Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities
- . Sheth emphasized that the Nifty 50 is currently positioned above the upper edge of the rising parallel channel. He believes that the index has the potential to reach 23,500 as the counting starts on 4 June. Sheth advised traders to use this opportunity to book profits in their long positions and wait for dips in Nifty around 23,000 to 22,800 levels to create new long positions. The medium-term target in Nifty is around 24,500,” said Sheth.
The Nifty 50 and Sensex hit all-time highs, driven by several factors:
1. Exit Poll Results for 2024 Elections: Exit polls predicted a significant victory for the BJP-led NDA, forecasting over 350 of the 543 seats in the Lok Sabha elections. This potential stability and continuity in government boosted investor confidence, leading to a surge in the stock market.
2. Better-than-Expected GDP Data: Recent GDP numbers exceeded expectations, indicating strong economic performance. This positive economic outlook further fueled market optimism and contributed to the upward momentum.
3. Strong Pullback in US Markets: A robust rebound in the US markets on the previous Friday also played a role. Global market trends often influence Indian markets, and the positive performance in the US provided additional support to the rally.
4. Arrival of Monsoon and Fiscal Deficit Reduction: The timely arrival of the monsoon is crucial for India’s agriculture sector and overall economic health. Additionally, a reduction in the fiscal deficit helped alleviate concerns about economic stability, adding to the positive sentiment in the market. These factors combined to create a favorable environment for investors, driving the Nifty 50 and Sensex to new record highs.
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