Stock Market Rebounds Post-Election Plunge; Sensex Climbs 650 Points, Nifty Surpasses 22,000

In a dramatic turnaround, the Indian stock market opened on a strong note on Wednesday, rebounding after the significant losses seen on election results day. The BSE Sensex surged by 650 points, while the NSE Nifty crossed the 22,000 mark, reflecting renewed investor confidence.

Market Performance

At 9:39 AM, the Sensex was trading at 72,267.95, up 188.90 points (0.26%), and the Nifty gained 46.05 points (0.21%) to reach 21,930.55. Early trading saw the Sensex jumping by 948.83 points to 73,027.88, while the Nifty climbed 247.1 points to 22,131.60. Despite the positive start, some selling pressure was observed at higher levels.

Election Results Impact

The market’s volatility followed the Lok Sabha election results, where the BJP, for the first time since 2014, fell short of the majority mark, securing 240 seats out of 543. The Congress won 99 seats. The results have made the BJP heavily reliant on its allies for government formation.

This election’s results starkly contrast with previous election reactions, where markets boomed post-exit polls. In 2019, for example, the exit polls predicting a BJP victory led to a surge in market sentiment, with the Nifty 50 touching 21,000. However, this time the market experienced a significant drop initially due to uncertainty.

According to a report by Motilal Oswal Research, despite the reduced majority, the policy agenda of Modi 3.0, focusing on investment-driven growth, capital expenditure, infrastructure development, and manufacturing, is expected to continue. The report also anticipates populist measures to address rural discontent and support marginalized communities.

Sector Performance

Among the top gainers in the Sensex were Hindustan Unilever, Nestle, Asian Paints, HCL Technologies, HDFC Bank, Kotak Mahindra Bank, and ITC. Conversely, shares of Larsen & Toubro, Power Grid, NTPC, and State Bank of India witnessed declines.

Expert Insights

V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, remarked, “The market will take some time to digest the unexpected election results. Stability will return, but until the cabinet and key portfolios are clear, volatility will persist.” He added that the sharp market decline has a silver lining, offering relief to investors through lower valuations and likely easing institutional buying post-clarity on the government’s formation and structure.

Global Market Influence

Asian markets showed mixed trends, with Seoul and Hong Kong trading higher, while Tokyo and Shanghai experienced declines. On Tuesday, U.S. markets closed with gains. Brent crude, the global oil benchmark, slightly dipped by 0.04% to $77.49 per barrel.

Foreign Investment and Recent Market Trends

Data from the stock market indicated that foreign institutional investors (FIIs) withdrew Rs 12,436.22 crore from the domestic market on Tuesday. The election results day marked one of the worst trading days in four years. The Sensex plummeted by 4,389.73 points (5.74%) to 72,079.05, its lowest level in over two months, and at one point, it plunged 6,234.35 points (8.15%) to a nearly five-month low of 70,234.43. The Nifty also fell sharply, losing 1,982.45 points (8.52%) to 21,281.45, and eventually closed at 21,884.50, down 1,379.40 points (5.93%).

Despite the initial turmoil, the market’s recovery on Wednesday reflects investor resilience and optimism about the future economic policies and stability post-election. As the new government forms and its economic agenda becomes clearer, the market is expected to stabilize further.

Facts at a Glance:

  • Sensex Early Trading High: 73,027.88
  • Nifty Early Trading High: 22,131.60
  • Sensex Post-Election Drop: 4,389.73 points (5.74%)
  • Nifty Post-Election Drop: 1,982.45 points (8.52%)
  • Foreign Institutional Investor Withdrawal: Rs 12,436.22 crore
  • Top Gainers: Hindustan Unilever, Nestle, Asian Paints
  • Top Losers: Larsen & Toubro, Power Grid, NTPC

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