Nifty new high
Stock market today: Sensex and Nifty 50 jumped almost 4% each in intraday trade on Monday, June 3
Stock market today: Indian stock market benchmarks—the Nifty 50 and the Sensex—soared to record-high levels in early trade on Monday, June 3, after a majority of the exit polls predicted on Saturday, June 1, that the Bharatiya Janata Party (BJP)-led NDA may win over 350 of the 543 seats in the Lok Sabha elections 2024.
The Indian stock market overcame election-related jitters as exit poll results predicted 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 previous close of 73,961.31 and surged 2,778, or 3.8 per cent, to hit its fresh record high of 76,738.89. The 30-share pack finally 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 previous close of 22,530.70. It rose 808 points, or 3.6 per cent, to hit its fresh record high of 23,338.70 in early deals. The Nifty 50 closed at 23,263.90, up 733 points, or 3.25 per cent.
Investors went on a hectic buying spree across segments, and the midcap and smallcap indices also surged to fresh record highs, surging nearly 4 per cent each.
The BSE Midcap index hit its fresh all-time high of 44560.97 during the session but closed 3.54 per cent higher at 44,367.67. The BSE Smallcap index hit 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.
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In May, the Nifty 50 and Sensex broke their three-month winning run, closing in negative territory due to heightened 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 clean sweep for the BJP-led NDA government for the third time in a row. Apart from this, there were few other things which pushed the index higher like better-than-expected GDP numbers, the strong pullback 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 underscored that the Nifty 50 is currently placed above the upper edge of the rising parallel channel. He believes that the index has the potential to touch 23,500 as the counting starts on 4 June.
Sheth said traders must 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 fresh long positions.
“The medium-term target in Nifty is around 24,500,” said Sheth.
Let’s take a look at four crucial triggers that boosted the market to record high levels:
Exit poll results
As Mint reported earlier, most exit poll results on June 1 predicted a historic third term for Prime Minister Narendra Modi-led National Democratic Alliance (NDA) government at the Centre. The Bharatiya Janata Party (BJP)-led NDA is projected to win more than 350 plus seats, as per at least ten exit polls.
Three major exit polls – India Today-My Axis India, India TV-CNX, and News24-Todays Chanakya – have predicted 400 plus seats for the NDA. The pollsters have predicted less than 200 seats for the Opposition INDIA bloc.
With the Lok Sabha elections concluded analysts anticipate that the market will stay in positive territory in the coming days, barring any unexpected negative developments.
“We anticipate Indian equities to rise over the next 3-4 days, with the Nifty reaching a new all-time high this week. We expect the Nifty to reach approximately 23,200-23,300 levels during this period. Additionally, we foresee the India 10-year yield reaching 6.9 per cent and the Indian rupee appreciating to 82.75,” said Amit Goel, Co-Founder & Chief Global Strategist at Pace 360.
See the list of stocks:Bull Run:Top 5 PSU stocks in FII bucket, election 2024 & (kuckad.com)
Macro boost
According to data released by the National Statistical Office (NSO) on Friday, May 31, India’s gross domestic product (GDP) for the January-March quarter of fiscal 2023-24 (Q4FY24) came in at 7.8 per cent, while for the full year FY24, the Indian economy grew by 8.2 per cent, beating estimates.
Moreover, the government’s fiscal deficit for 2023-24 stood at 5.63 per cent of the GDP, marginally better than the 5.8 per cent estimated in the Union Budget, according to data released by the Controller General of Accounts (CGA) on Friday, May 31.
The GDP numbers on Friday were better than expected, with 8.2 per cent growth. This will provide fundamental support to the market. S&P’s upward revision of India’s rating outlook also is positive,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Last Wednesday, S&P Global raised its outlook on India to positive and stable after 14 years, citing India’s strong macroeconomic fundamentals and government capex. However, the rating agency kept its sovereign credit ratings unchanged at ‘BBB-/A-3’, the lowest it offers. It said cautious fiscal and monetary policy could improve ratings over the next two years.
Across-the-board buying
The market witnessed broad buying, led by the banking, financial, metal, realty, and oil and gas sectors. The Nifty Bank index surged over 4 per cent to hit a fresh record high of 50,990.
The Nifty PSU Bank index soared nearly 7 per cent in morning trade, while Realty, Metal and Financial Services indices jumped up to 4 per cent.
Positive global cues
Positive global cues also supported domestic market sentiment. Inflation remains sticky, but hopes of rate cuts in Europe have been growing. The US Fed, too, may consider rate cuts in the second half of the year.
Moreover, recent macro data prints in some major Asian economies have come positive. According to Reuters, Japan’s factory activity expanded for the first time in a year in May, while South Korea’s factory activity grew at the fastest pace in two years.
