Markets make full recovery from election day bloodbath, Sensex and Nifty hit a fresh all-time high

The Sensex hit its fresh all-time high of 76,795.31 during the Friday session before closing at 1,619 points, or 2.16%, higher at 76,693.36.
Image used for representational purposes only.
Image used for representational purposes only.PTI

MUMBAI: On the back of sharp buying over the past three sessions, India’s equity market recovered from the earth-shattering fall it witnessed on the Lok Sabha election result day (Tuesday). On Friday, India’s frontline indices - Sensex and Nifty- gained more than 2% each and investors' cumulative wealth surged by Rs 7.5 lakh crore.

The Sensex hit its fresh all-time high of 76,795.31 during the Friday session before closing at 1,619 points, or 2.16%, higher at 76,693.36. Nifty 50 closed 469 points, or 2.05%, higher at 23,290.15.

The recovery is attributed to political stability at the centre as Prime Minster Narendra Modi’s BJP, despite failing to secure 272 seats, has received support from key NDA allies. The fresh buying is also attributed to the Reserve Bank of India maintaining a status quo on the repo rates and policy stance while revising the GDP estimates for FY25 upwards in its latest MPC meeting.

"The anticipation of stability within the coalition government at the centre, coupled with the RBI's upward revision of its growth forecast for FY25 to 7.2%, fuelled a broad-based rally in the domestic market. The Indian market surpassed its previous record high set on exit poll day and reached a fresh peak. Though the last mile towards the inflation target remains sticky, investors are expecting the MPC to be one step closer to the easing cycle,” said Vinod Nair, Head of Research, Geojit Financial Services.

The market capitalisation of all the firms listed on the BSE rose to Rs 423.4 lakh crore on Friday from nearly Rs 415.9 lakh crore in the previous session, making investors wealthier by Rs 7.5 lakh crore in a single session. In the broader market, the BSE Midcap index rose 1.28%, while the Smallcap index ended with a gain of 2.18%. In the Sensex index, all its 30 constituents ended in the positive territory, with Mahindra & Mahindra, Wipro, Tech Mahindra, Bharti Airtel, Infosys and Tata Steel emerging as the biggest gainers.

The Monetary Policy Committee, consisting of three RBI and an equal number of external members, kept the repo rate unchanged at 6.50% for an eighth straight policy meeting and stuck to its relatively hawkish stance of "withdrawal of accommodation", Governor Shaktikanta Das said in his statement.

Market experts believe that there are indications in the MPC meeting that rate cuts by the central banks may be nearer than expected. “RBI’s status quo on rates and stance was in line with market expectations, but the split in voting patterns clearly shows the increasing probability towards a pivot in the policies ahead," said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.

Best week of 2024

Despite shedding about 6% on Tuesday, the Sensex surged 3.8%, while the Nifty surged 3.4% this week, making it the best 5-day session of CY 2024. The Rs 31 lakh crore m-cap erosion on Tuesday has been recovered in just 3 sessions.

India’s equity market headline indices registered their biggest single-day fall of four years on Tuesday when Prime Minister Narendra Modi-led Bharatiya Janata Party (BJP) failed to clinch 272 seats in the 543-seat Parliamentary election

The BSE Sensex closed the Tuesday session with a massive loss of 4,390 points, or 5.74%, at 72,079.05, while the Nifty 50 ended with a cut of 1,379 points, or 5.93%, at 21,884.50.

At one point, the Sensex was down 6,100 points and the Nifty gave away 1,600 points. Investors had lost a whopping Rs 31 lakh crore on Tuesday as the market capitalisation of all BSE-listed firms came down to Rs 395 lakh crore from Rs 426 lakh crore on Monday.

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