Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Markets / Stock Markets/  Sensex rallies nearly 2% as NDA’s landslide win boosts risk appetite
BackBack

Sensex rallies nearly 2% as NDA’s landslide win boosts risk appetite

Analysts expect the govt to focus on financial inclusion, infra, housing, fiscal consolidation
  • A rate cut by the RBI will be close call due to higher oil prices, global uncertainties, say analysts
  • India's benchmark Sensex and Nifty indices on Friday surged over 1.6%.Premium
    India's benchmark Sensex and Nifty indices on Friday surged over 1.6%.

    Mumbai: The benchmark Sensex and Nifty indices on Friday surged nearly 2% on expectations that the strong mandate for the Bharatiya Janata Party will help the new government at the centre to pursue bold reforms to revive the economy.

    The Sensex closed 1.6% higher at 39,434.72 points, while the NSE Nifty 50 index rose 1.6% to 11,844.10 points. So far this year, the Sensex and Nifty have risen 9.5% each.

    Analysts said that the landslide victory has raised hopes that the government would take decisive action to boost business sentiment, which in turn, will support market growth.

    “The risk taking ability came back as the elections concluded with an overwhelming result. The market settled for a board-based rally, expecting better outlook for the economy in the next one to two quarters. Volatility index halved to 16.5 compared to three days ago, pushing mid- and small-caps across the market, given the attractive valuations. This trend is likely to continue in the near-term and settle for a long-haul, expecting the upcoming final budget," said Vinod Nair, head of research, Geojit Financial Services.

    According to Emkay Research, the new government should focus more on financial inclusion, spending on infrastructure development for roads, railways, housing, fiscal consolidation, smoothening of earlier reforms, such as goods and services tax (GST), Real Estate (Regulation and Development) Act (RERA), and banking, financial services and insurance (BFSI), and job creation, over which the government has been severely criticized, the report said.

    View Full Image

    Mumbai: The benchmark Sensex and Nifty indices on Friday surged nearly 2% on expectations that the strong mandate for the Bharatiya Janata Party will help the new government at the centre to pursue bold reforms to revive the economy.

    The Sensex closed 1.6% higher at 39,434.72 points, while the NSE Nifty 50 index rose 1.6% to 11,844.10 points. So far this year, the Sensex and Nifty have risen 9.5% each.

    Analysts said that the landslide victory has raised hopes that the government would take decisive action to boost business sentiment, which in turn, will support market growth.

    “The risk taking ability came back as the elections concluded with an overwhelming result. The market settled for a board-based rally, expecting better outlook for the economy in the next one to two quarters. Volatility index halved to 16.5 compared to three days ago, pushing mid- and small-caps across the market, given the attractive valuations. This trend is likely to continue in the near-term and settle for a long-haul, expecting the upcoming final budget," said Vinod Nair, head of research, Geojit Financial Services.

    According to Emkay Research, the new government should focus more on financial inclusion, spending on infrastructure development for roads, railways, housing, fiscal consolidation, smoothening of earlier reforms, such as goods and services tax (GST), Real Estate (Regulation and Development) Act (RERA), and banking, financial services and insurance (BFSI), and job creation, over which the government has been severely criticized, the report said.


    “We believe that the government measures and spending would focus toward capex activities, while consumption would take a back seat," the Emkay report added.

    The BJP-led National Democratic Alliance won 353 out of the 542 seats in the lower house, according to the Election Commission of India website.

    The BJP crossed the majority on its own yet again winning 303 seats, compared with 282 seats in 2014. The United Progressive Alliance (UPA) has garnered 91, with the Congress winning 52 seats.

    Investors will keep an eye on the first full budget of the new government for fiscal deficit and borrowing targets.

    Meanwhile, the Indian rupee and the 10-year bond closed higher on Friday, as analysts expected Prime Minister Narendra Modi’s re-election will help avoid populist measures.

    Also, benign retail inflation outlook, expectations of an interest rate cut and hopes of continued bond purchases by the Reserve Bank of India (RBI) boosted sentiment.

    However, analysts said a rate cut by the RBI will be a close call due to global uncertainties, lack of clarity on the monsoon and higher oil prices.

    The rupee strengthened 0.7% to 69.53 a dollar. The 10-year bond yield closed at 7.225%, compared with Thursday’s close of 7.236%. Since the beginning of May, bond yield has fallen nearly 20 basis points. So far in 2019, the rupee rose 0.13% against the greenback. During the period, foreign investors bought $9.51 billion of Indian equities, and sold $446.80 million in debt market.

    “The rupee has also shown huge momentum gains. The momentum could sustain for the time being, pertinent on actual election outcome. Policy and political certainty will be good from foreign flows perspective, both FDI as well as FPI flows," an Edelweiss Securities report said.

    Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

    Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
    More Less
    Published: 24 May 2019, 04:21 PM IST
    Next Story footLogo
    Recommended For You
    GENIE RECOMMENDS

    Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

    Let’s get started
    Switch to the Mint app for fast and personalized news - Get App

    Chat with MintGenie