MUMBAI: The D-day rally took off from the minute the market opened on Thursday even as early leads were trickling in. When the lead projections firmed up, Sensex climbed quickly to hit a peak, all time high and breached the symbolic 40,000, and Nifty 12,000 points, mark. While gains of 10 to 15 per cent was a given if NDA retained power, equity markets turned surprisingly negative, to end the day in red even as the NDA and BJP went euphoric with a historic win.
Profit booking at historic highs and building of fresh shorts are some of the possible explanations for markets turning negative, with the Sensex erasing a 1,000-point plus gain to end with a loss of 298.82 or 0.76 per cent at 38,811.39.
It was also a case of ‘buy on expectations and sell on news’ phenomenon. Early in the day, when the rest of Asia was in the red, reeling from global growth worries and oil prices, Indian markets trended higher, but fell in line with global peers by the end of the trading day.
“India seems to be voting a majority government for another term. This likely continuity in administration is a source of comfort for stocks due to an accompanying policy predictability. We expect some shifts in the policy regime. Sensex target at 45,000 for June-20,” said Morgan Stanley.
The continuity of the regime at the Centre has also raised hopes of prudent tackling of economic issues at hand. Precious months were lost to electioneering when there was a pressing need to tackle the NBFC crisis, liquidity issues etc., leading to an urgency now for the new government to deal with these issues.
“This is the first time in world history that a government that has introduced GST in a country has been voted back to power. Global issues may bother a bit less in the near term, though their shadows can linger on. The earnings growth challenge will continue in the near term till the monsoon’s spread and intensity is assured and the liquidity situation eases,” said Dhiraj Relli, MD and CEO, HDFC Securities.
poll push now over
Now that the uncertainty over the election is over, the markets are set to be driven by the monsoon, budget presentation, and how different the second edition of this government is going to be. At the global level, the stock exchanges will be driven by worry over oil prices, and the US-China trade war and the impact it will have on global portfolio flows into the Indian market.