India’s equity market cheered the state election outcome in which the Bharatiya Janata Party (BJP) won a clear mandate in West Bengal and Actor-politician Vijay’s Tamilaga Vettri Kazhagam (TVK) surprised everyone by emerging as the single-largest party in Tamil Nadu. BJP also stormed back in Assam while the Congress-led alliance won the Kerala state elections. In Puducherry, the NDA alliance is all set to form the government.
While the street at large welcomed the election results, higher crude oil prices in the backdrop of changing geopolitical conditions in West Asia kept the bulls in check. Brent crude oil prices on Monday were up by 2% to around $110/barrel, exerting pressure on emerging economies.
The benchmark NSE Nifty50 index, after hitting the day’s high of 24,290, settled at 24,119.30, up 121.75 points or 0.51%. The BSE Sensex, which hit an intraday high of 77,910.75, gained 355.90 points or 0.46% to settle at 77,269.40.
Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services, said that markets are expected to sustain their gradual upmove, with near-term direction anchored around three key drivers - softer crude oil prices, strong domestic data (record GST collection & healthy April auto sales growth), and political clarity post state election outcomes.
He added that a BJP win in 3 out of five state assembly elections is likely to reinforce political stability and provide a sentiment boost, while record GST collection and better-than-expected auto volume growth signals resilient underlying demand.
Vinod Nair, Head of Research, Geojit Investments said that Investor sentiment remained supported by a favourable election outcome in West Bengal and better-than-expected Q4 earnings, helping markets look past Middle East-related concerns. However, intermittent profit booking persisted amid uncertainty surrounding the U.S. “Project Freedom” initiative to reopen the Strait of Hormuz.
“While the resolution path may take time, optimism around gradual progress continues. Crude prices holding below $110 are providing near-term comfort. Going ahead, market direction will hinge on geopolitical developments and oil price trends, given their impact on inflation, interest rates, the rupee, and corporate margins,” he added.
Higher oil prices for an import-dependent nation such as India are likely to translate into higher inflation in the coming months, exerting pressure on currency stability and corporate margins, thereby impacting overall equity market sentiment. Meanwhile, the rupee weakened further, slipping below 95.05, as sustained FII outflows and crude prices above $100 continued to pressure the currency.
A relentless selling by foreign portfolio investors (FPIs) also continues to weaken market sentiment and the rupee. During April FPIs were sellers in the market for Rs 63,167 crores while they invested Rs 2,319 crores through the primary market taking net FPI outflows to Rs 60,848 crores. The total FPI outflows from India in 2026 (at the end of April) stood at a massive Rs 191,968 crores.
V K Vijayakumar, Chief Investment Strategist, Geojit Investments said that a significant trend in FPI flows this year is that Japan, South Korea and Taiwan are attracting significant inflows while India and some other emerging markets which are facing headwinds from the energy crisis and currency depreciation are facing outflows.
