Markets bounce back on news of NDA forming government, regain Rs 13 lakh crore in value

The overall market capitalisation of the firms listed on BSE surged to nearly Rs 408 lakh crore from nearly Rs 395 lakh crore in the previous session.
BSE Sensex
BSE Sensex File photo

After a colossal fall on the election result day (Tuesday), the Indian equity market made a marginal recovery on Wednesday following news that political allies of BJP will stick with the party to form a NDA government for the third consecutive term.

The NSE Nifty 50 gained 735.87 points or 3.36% to close at 22,620.35, while the BSE Sensex jumped 2303.19 points or 3.10% to settle at 74,382.24. The gains came after two indices crashed 6% on Tuesday following a fractured mandate by voters wherein no single party could win 272 seats in the 543-seat parliamentary election.

"Indian market exhibited a spirited recovery driven by broad-based buying across various sectors as political stability appears assured. However, attention will remain on the formation of the government and the forthcoming RBI policy meeting," said Vinod Nair, Head of Research, Geojit Financial Services.

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Nair added that the market does not expect any change in RBI's policy stance given persistent high food inflation, and an expectation of an increase in government spending, which has led to a notable traction in FMCG stocks.

The overall market capitalisation of the firms listed on BSE surged to nearly Rs 408 lakh crore from nearly Rs 395 lakh crore in the previous session, making investors wealthier by about Rs 13 lakh crore. In the broader market, the BSE Midcap index jumped 4.41%, while the Smallcap index rose 2.93%.

In the Nifty-50 pack, 48 stocks ended with gains on Wednesday.

Adani Ports (up 7.29%), IndusInd Bank (up 7.06%) and Hindalco (up 6.46%) were the top gainers. Only two stocks - Larsen & Toubro and BPCL - ended in the red in the 50-share index. All sectoral indices ended with strong gains on the NSE.

Arvinder Singh Nanda, Senior Vice President of Master Capital Services, attributed the surge in prices to positive market sentiment surrounding the anticipated formation of the government.

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