MUMBAI: Stocks hit a record rally in a decade, indices hit record highs, foreign portfolio investors turned net buyers, the volatility index fell, and the investor wealth rose by over five lakh crores in a day to sum up the impact of a near-unanimous victory projections exit polls have given the incumbent NDA government.
BSE Sensex opened with a 900-point gap from Friday’s close and the anticipated profit booking didn’t upset the party as Sensex closed the day at 39,352.67, a gain of 1421.90 points or 3.75 per cent. The rally was broad-based and the Nifty -50 closed 421.10 points or 3.69 per cent higher at 11,828.25.
“It is quite rare to see that no one is bothered what’s happening in global markets and whether US President has sent any tweet or not. Today, it was all about our mega event and the result of exit polls over the weekend. In the initial hour, there was mild profit taking seen; but eventually, this got bought into and the index went on register colossal rally,” said Sameet Chavan, chief analyst-technical and derivatives, Angel Broking.
But, are the markets overreacting to only an estimate of the exit polls? Well, it is probably reacting with relief, or shedding the nervousness over a possible hung verdict, prospect of unstable coalition coming to power that along with global issues led to increasing volatility during the long winding polling phase. While the technical analysts look at 12,000 as the next mark for the Nifty, it would make traders anxious on May 23 when the final verdict rolls out.
“Rather than getting carried away by the rally, one must focus on robust franchisees with strong fundamentals. Some of our top sectoral bets which we continue to remain positive on are high-quality financials, the beaten down discretionary and non-discretionary consumption related businesses and building materials,’ said Devang Mehta, Head – Equity Advisory, Centrum Wealth Management. Once the dust settles focus will shift to macros, earnings and the fundamentals.
Notable among the stocks that hit a 52-high were Titan at Rs 1,236, Cement stocks Ultra Tech at Rs 4,805, Shree Rs 20,625. Financials and banks were strong pillars of Monday’s rally as HDFC, Bajaj FinServ, Bajaj Finance, State Bank of India, HDFC Bank, ICICI Bank, Axis, Kotak all hitting 52-highs.
Exit polls have gone wrong in the past, and in the current one if the tally of BJP in UP, West Bengal and Orissa is different from exit poll predictions it can impact the overall tally, said Motilal Oswal in a report on Monday.
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