In a remarkable recovery following the announcement of the Lok Sabha election results, India’s domestic stock market indices Sensex and Nifty showed significant gains on Wednesday, May 5. Opening nearly 1% higher, both indices extended their upward momentum throughout the morning trade.
Key Highlights:
Sensex Performance: The Sensex surged by 2.46%, climbing 1,772.04 points to reach 73,851.09 by 11:30 am. It had opened at 73,027.88, marking a 1.32% increase from the previous close of 72,079.05.
Nifty Performance: The broader Nifty index jumped 2.56%, gaining 560.5 points to hit an intraday high of 22,445, following a gap-up opening of 243.85 points, or 1.11%.
This strong performance comes after a tumultuous day on Tuesday when the Sensex dropped by 4,389.73 points (5.74%) to close at 72,079.05, and the Nifty 50 fell by 1,379.4 points (5.93%) to close at 21,884.5. The declines were attributed to the Bharatiya Janata Party (BJP) failing to secure a majority in the general elections, securing only 240 seats.
Market Sentiment:
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, “The market will take some time to absorb the unexpected election results. Stability will return to the market soon but volatility will continue till there is clarity on the cabinet and the key portfolios. A sharp rebound in the market is unlikely in the near term but sectoral preferences might change.”
Volatility Eases:
The volatility index, India VIX, which had surged by 51% to 31.71 during Tuesday’s intraday trades before closing at 26.75, further eased to 19.45 on Wednesday, indicating a reduction in near-term volatility.
Market Outlook:
According to a report by Axis Securities, “The National Democratic Alliance (NDA) will form the Modi 3.0 government with coalition partners. With this, the market will likely gain confidence in the political stability as well as the policy stability. Some positive recovery is hence expected going forward.”
Sector Performance:
Recoveries: Nifty PSE and Nifty CPSE, which saw significant declines of 16.38% and 15.04% respectively on Tuesday, managed to recover some losses, falling by only 0.67% and 0.55% respectively.
Top Gainers: NSE firms that showed significant gains included Tata Consumer Products (6.30%), Hindustan Unilever (6.06%), Hero MotoCorp (6.46%), Mahindra & Mahindra (6.01%), and Asian Paints (4.71%).
The market’s reaction underscores the resilience and adaptability of investors, reflecting a cautious optimism as the political landscape begins to stabilize.
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