Sensex ends at record closing high, a day after Modi's historic win4 min read . Updated: 24 May 2019, 04:39 PM IST
- Oil prices have seen a sharp fall as US-China trade tensions dampened demand outlook
- SBI, ICICI Bank, IndusInd Bank and Axis Bank saw strong gains
Indian markets rose sharply today, led by gains in banking stocks. The Sensex ended
623 points higher at 39,434, a record closing high. The Nifty settled 1.6% higher at 11,844. Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) has won over 300 seats out of 542, the first back-to-back majority for a single party since 1984. The Sensex hit 40,000 level for the first time on Thursday after trends showed BJP was headed for a majority but ended lower on profit-booking.
Banking stocks led the gains today, with Nifty Bank index rising 2.6%. ICICI Bank today surged 5% while SBI, IndusInd Bank, Axis Bank and HDFC Bank were among the other top gainers in the banking space.
Apart from SBI, other PSU banks also attracted strong buying today. Nifty PSU Bank index up surged 6%, with Canara Bank, Union Bank, Bank of India, OCB and Bank of Baroda advancing between 6% and 9%.
"BJP's landslide victory has raised hopes that the government would take decisive actions to boost business sentiment and that in turn will support the market growth. We feel this feel-good factor could extend next week too, provided feeble global cues do not spoil the party," said Jayant Manglik, president for retail distribution at Religare Broking.
Broader markets also participated in today's rally, with BSE midcap and smallcap indices rising more than 2%.
"The risk-taking ability came back as the elections concluded with overwhelming result. The market settled for a board-based rally expecting better outlook for the economy in subsequent quarters," said Vinod Nair, head of research at Geojit Financial Services.
Midcap, smallcap stocks outperform
The BSE midcap and smallcap indices were up 2% in late trade, outperforming the
Sensex and Nifty. Many analysts expect midcap and smallcap stocks to outperform from here on, due to improvement in risk-on sentiment and expectations of an acceleration in economic growth. (Modi 2.0: Here are top stocks picks from four brokerages)
British PM May Theresa May resigns
British Prime Minister Theresa May on Friday said she would quit. She also set out a timetable for her departure: She will resign as Conservative Party leader on June 7 with a leadership contest in the following week. "I will resign as leader of the Conservative and Unionist party on Friday, 7 June so that a successor can be chosen," May said outside 10 Downing Street. Britain's main index was 0.66% higher in early trade.
Markets to remain stock specific: Prabhudas Lilladher
The brokerage said that it remains positive on domestic consumption stocks and it has also turned overweight on engineering. Prabhudas Lilladher is also positive on financials with HDFC bank, ICICI Bank and HDFC Ltd among its top picks.
SpiceJet, IndiGo share jump as oil prices fall
Airline shares were in the limelight today with SpiceJet surging 6% and InterGlobe (IndiGo) 3%.
Inox Leisure hits fresh 52-week high
Shares of Inox Leisure today hit a fresh 52-week high of ₹355 after the stock surged over 9%. Earlier this month, the multiplex operator had reported strong earnings for the March quarter, with revenues from operations going up by from ₹324 crores to ₹479 crore.
Expect midcaps to outperform largecaps: Elara Capital
On a sector level, Elara Capial, prefers investment themes ahead of consumption. "We are overweight on Financials (corporate banks), Industrials (capital goods & infrastructure), energy and utilities. As an asset class, we expect mid caps to outperform large caps," Elara Capital said in a report.
Elara Capital's top stocks picks in midcap and smallcap space
Ashok Leyland, Crompton Consumer, Exide, Gujarat State Petronet , KEC International, MRF, Nestle, PNC Infratech, Shree Cement, are Supreme Industries are among the top stock picks of Elara Capital in the mid and smallcap space.
Elara Capital's view on markets
With the ruling NDA set for another five-year term, says Elara Capital, political risks have reduced and market expectations of government’s continuity have been addressed. "There would be renewed expectations for a more reforms-oriented policy agenda in disinvestment, GST simplification, labor reforms, the ease of doing business and land acquisition. We believe elections-related exuberance could propel markets in the near term. However, the current level of corporate fundamentals, geopolitical developments, such as trade wars and US-Iran conflict, and the progress of monsoon will weigh on the markets," it said.
Bond prices rise for the third straight day
India's 10-year bond yield fell for the third day as analysts expect the NDA government to continue with its fiscal consolidation measures. The 10-year bond yield was at 7.219% compared with Thursday's close of 7.236%. Since start of the May, bond yield has fallen nearly 20 basis points.
HPCL surges 5%; BPCL, IOC also move higher
Shares of oil marketing companies IOC, HPCL and BPCL were in the spotlight in the backdrop of a sharp fall in global oil prices. HPCL rose 5% while BPCL and IOC were up 2-3%.
Kotak Securities remains positive on midcap and smallcap stocks
Rusmik Oza, head of fundamental at Kotak Securities, says that rich valuations of Nifty (closer to 12,000 levels) provides limited upside in large caps. "There could be some near-term concerns emanating from earnings downgrades that is taking place in the ongoing results season. With stability and visibility back in place we feel investors should focus more on midcap and smallcap stocks rather than large caps," he said.
Expect a pick-up in inflows in mutual funds: Motilal Oswal
Commenting on NDA's decisive win, Motilal Oswal, CMD of MOFSL, said, "This election result removes the key overhang of the markets i.e. fractured mandate and loss of momentum on structural reforms. We expect equity markets to take this results positively. Improvement in sentiment post the formation of stable government should augur well for foreign institutional flows as well as domestic mutual fund inflows."
Credit view on India hinges on policies of new govt: Moody's
Moody's on Thursday said its credit view on India will depend on policies of the new government and expressed hope that the country would continue with its fiscal consolidation plan. "Any credit implications of the outcome of India’s general election will be determined by the policies adopted by the government in the next few years. These policies are yet to be formulated," Moody's Investors Service VP Sovereign Risk Group William Foster said. Moody's expects the broad push towards fiscal consolidation to remain, although with greater policy emphasis on supporting low incomes, Foster added.