Mumbai: The benchmark equity indices, Sensex and Nifty, commenced trading optimistically on Wednesday, rebounding sharply during afternoon sessions following substantial losses in the previous session. The resurgence was driven by value-buying opportunities at lower levels, which buoyed market sentiment.
Recovering strongly from Tuesday’s significant downturn, the 30-share BSE Sensex surged by 1,772.04 points to reach 73,851.09 in afternoon trade. Similarly, the NSE Nifty rose by 560.5 points to 22,445.
Despite the NDA holding a comfortable majority in the 543-member Lok Sabha, the BJP fell short of the majority mark for the first time since 2014, necessitating coalition support for government formation.
According to a report by Motilal Oswal Research, “Despite the reduced majority, we anticipate continuity in Modi 2.0’s policy agenda focused on investment-led growth, infrastructure development, manufacturing, with potential adjustments. Additionally, we expect targeted measures to address rural challenges and enhance market sentiment given the electoral outcome.”
Among the top performers among the 30 Sensex constituents were Mahindra & Mahindra, Hindustan Unilever, Asian Paints, IndusInd Bank, Kotak Mahindra Bank, and Nestle. Conversely, Larsen & Toubro, Power Grid, and State Bank of India experienced declines.
Commenting on market dynamics, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, “The market will require time to assimilate the unexpected election results. Stability is anticipated to return gradually, albeit with ongoing volatility until clarity emerges on the cabinet composition and key portfolios.”
One positive outcome of the market correction is the moderation of overextended valuations, potentially facilitating institutional buying once clarity on the cabinet formation emerges.
In Asian markets, Seoul recorded gains, while Tokyo, Shanghai, and Hong Kong reported declines. In the US, markets closed positively on Tuesday. Meanwhile, global oil benchmark Brent crude marginally dipped to USD 77.49 per barrel.
Foreign Institutional Investors (FIIs) divested equities worth Rs 12,436.22 crore on Tuesday, according to exchange data, amidst the backdrop of the worst trading day in four years as the BJP faced electoral challenges.
The BSE Sensex plummeted by 4,389.73 points or 5.74 per cent to settle at a more than two-month low of 72,079.05 on Tuesday. In intraday trading, the index plunged by 6,234.35 points or 8.15 per cent to touch a nearly five-month low of 70,234.43. The NSE Nifty also experienced significant declines, falling by 1,982.45 points or 8.52 per cent during the day to close at 21,884.50, marking a decline of 1,379.40 points or 5.93 per cent.
