Sensex Surges Over 3 Percent

Sensex Surges Over 3 Percent
Sensex Surges Over 3 Percent/ANI
Sensex Surges Over 3 Percent
Sensex Surges Over 3 Percent/ANI

Sensex Surges Over 3 Percent

Sensex Surges Over 3 Percent

Sensex Surges Over 3 Percent

Key Highlights:

  1. Sensex closes up 3.20%, Nifty 50 gains 3.36% after NDA allies back BJP.
  2. Broad-based recovery led by banking, auto, financial services, FMCG, and metal sectors.
  3. Experts advise caution in investing in overheated momentum and small-cap stocks.

Indian benchmark indices soared on Wednesday, recovering from the previous day’s losses, after two key NDA allies, JD(U) and TDP, reaffirmed their support for the BJP, the single largest party in the incoming parliament. This backing eased concerns about political stability, which had caused markets to close nearly 6% lower on Tuesday following the BJP’s failure to secure a majority on its own for the first time in three Lok Sabha elections.

The Sensex opened higher at 73,027.88, hit an intraday high of 74,534.82, and closed at 74,382.24, up 2,303.19 points, or 3.20%. Similarly, the Nifty 50 opened at 22,128.35, reached a high of 22,670.40, and closed at 22,620.35, up 735.85 points, or 3.36%.

Vinod Nair, Head of Research at Geojit Financial Services, noted, “The 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. The market does not expect any change in RBI’s policy stance given persistent high food inflation and expected increase in government spending, which has led to notable traction in FMCG stocks.”

Vaibhav Porwal, Co-founder of Dezerv, commented, “Investors should keep in mind that a BJP-led coalition government is not necessarily bad for the economy. From 1989 to 2014, our GDP grew by more than 8% annually while a coalition government was at the Centre. Yesterday’s market reaction was a knee-jerk reaction.”

Among the 30-stock BSE Sensex, only Larsen & Toubro ended in the red, while IndusInd Bank, Tata Steel, Mahindra & Mahindra, Bajaj Finance, and Kotak Mahindra Bank were top gainers. In the 50-stock Nifty 50, Larsen & Toubro and BPCL were the only stocks that closed lower, with Adani Ports & SEZ, IndusInd Bank, Hindalco Industries, Tata Steel, and Mahindra & Mahindra emerging as top gainers.

The broader market also saw gains, with the BSE MidCap index rising 4.41% and the BSE SmallCap index climbing 2.93%. However, Porwal cautioned investors about investing in momentum stocks or small-cap stocks, as they have remained overheated over the past two years. “Any sustained period of sideways or downward movement in momentum stocks can trigger a sell-off. Investors should consider the risk involved before making such investments.”

All sectoral indices traded in the green, gaining between 2.3% and 5.8%, with the Bank, Auto, Financial Services, FMCG, and Metal indices gaining more than 4% each.

Looking ahead, Porwal added, “A steep fall in the market without any structural change in the fundamentals must be regarded as an opportunity. We believe that investors should capitalize on this opportunity for fresh investments in equity.”

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