India’s equity market on Monday extended the gains made on Friday as the BJP, the ruling party at the centre, performed exceptionally well in the important Maharashtra state elections and together with allies won a clear majority.
Local benchmark indices -- BSE Sensex and NSE Nifty 50 -- opened higher by about 1.5 percent each and maintained the lead throughout the session. Sensex closed the day above the 80,000 mark while Nifty breached the 24,000 level.
The 30-stock index settled 992.74 points or 1.25 percent higher at 80,109 and the Nifty closed 314 points or 1.32 percent higher at 24,221. The fresh rally comes after the two benchmarks had surged about 2.5 percent each—their highest single-day gain in nearly five months- on Friday.
Despite the gains in two sessions, the benchmarks are still down by 7-8 percent from their 52-week highs scaled in late September.
The market capitalisation of all BSE-listed firms surged to Rs 439.6 lakh crore from Rs 432.6 lakh crore in the previous session, making investors wealthier by about Rs 7 lakh crore on Friday. In the broader market, the Nifty Midcap 100 surged by 1.61% and the Nifty Smallcap index gained more than 2 percent on Monday.
"Investors are optimistic that sectors like infrastructure, urban development, and manufacturing will benefit from BJP’s policy focus. The strong showing by the BJP and its alignment with growth-driven policies boosted investor confidence, paving the way for a potential market recovery,” said Vikram Kasat, Head - Advisory, PL Capital - Prabhudas Lilladher.
BJP-led Mahayuti alliance won 235 seats with 49.6 percent of the vote share in the state election, with the opposition Maha Vikas Aghadi (MVA) bagging just 49 seats and 35.3 percent of the votes.
Manish Jain, director of institutional business (equity & fi) division at Mirae Asset Capital Markets said that the decisive NDA alliance victory in a big state like Maharashtra is sentimentally positive for the stock market.
He, however, also stated that it is important to note that the Loksabha elections just got over and the current central government has another full term to complete so once state elections are over, markets' focus will shift back to earnings, budget, US policies and geopolitics.
“Sustained inflation print, FPI outflows, strong dollar and tariff threats could sour the market mood,” said Jain while adding that Adani issues won’t be able to affect general market mood for a sustained period. Shares of all the 10 listed Adani Group companies opened in green on Monday but some of them, particularly Adani Green Energy, fell sharply as the day progressed.
Adani Group shares nosedived more than 23% on Thursday after chairman Gautam Adani was indicted in the United States over bribery and fraud charges.
BEL, Shriram Finance, ONGC, M&M, Adani Enterprises and BPCL were among the gainers on the Nifty 50 pack, while JSW Steel was the major laggard. Shares of Zomato surged by more than 3.5% as the food tech company is set to replace JSW Steel in the BSE Sensex, effective from December 23.