Wrap-up | Markets cheer change, Sensex up 1%

Wrap-up | Markets cheer change, Sensex up 1%

Mumbai: Markets cheered the change of governments in West Bengal, Kerala and Tamil Nadu. Many commentators also see the assembly results as a vote of confidence for the ruling Congress party.

The ruling party was voted back to power in Assam. While it managed to topple the communist government in Kerala, its ally in West Bengal toppled the incumbent government with a thumping majority. Its coalition lost in Tamil Nadu.

Of course, whether this will help the central government push through reforms is another thing altogether. Still, the weakening of the DMK will give the Congress and the Prime Minister Manmohan Singh more say in a cabinet reshuffle. Now, the Prime Minister can hopefully aim to take tough decisions such as dropping under-performers and initiating measures that will improve India’s financial health.

Sensex: 18,531 +1.07%

Nifty: 5,544 +1.07%

The net positive results gave the much-needed directional call for the India stocks. Saddled with weak global cues, Indian markets opened flat as traders cautiously weighed the poll outcome. Due to overall bearishness, lots of short positions were built up in the market. The positive poll outcome came as a positive trigger, which helped turn the tide.

Here’s what a cross-section of market participants had to say.

Rajesh Jain, Executive Vice President and Head-Retail Research, Religare Securities says:

The bounce back is due to a mixture of factors. There was too much bearishness in the market. This led to a built-up of short positions in the market. The positive results came as an initial trigger. With poll outcome positive for ruling government, traders rushed to cover short positions. Also helping the sentiment is the positive opening in the European markets and stabilizing commodities in the international markets.

Dharmesh Pancholi - Senior Manager- Advisory (Equity), Sharekhan says:

Election results had a positive rub-off effect on the Indian markets. Short covering by traders and positive global cues helped the markets stage a smart pullback.

Sensex gained more than 2% in intra-day deals

BSE FMCG: 3,803 +2.35%

BSE Metal: 15,404 +1.48%

BSE Healthcare: 6,149 +1.40%

BSE Auto: 9,221 +1.35%

BSE Bankex: 12,590 +1.30%

Except United Breweries, all stocks in the BSE FMCG index closed with gains. ITC, Marico and Nestle India registered smart gains of over 2% each.

ITC: 189 +3.10%

Marico: 136 +2.29%

Nestle India: 4,106 +2.07%

Stabilizing commodity prices helped the BSE Metal index close the day with gains. Stocks of metal companies gained on stable base metal prices in the London Stock Exchange.

Bhushan Steel: 454 +2.20%

Jindal Steel: 642 +2.43%

JSW Steel: 935 +2.70%

Overall it was a good day for the Indian stock markets. More than half of the shares traded on the BSE closed with gains.