June 6th 2024.
The stock market in Mumbai opened on a positive note on Thursday as Sensex and Nifty continued their upward rally for the second consecutive day. This was in response to the unanimous election of Narendra Modi as the leader of the BJP-led National Democratic Alliance, a decision that was made on Wednesday. In early trade, the BSE Sensex saw a sharp increase of 696.46 points, reaching 75,078.70, while the NSE Nifty climbed 179.15 points to 22,799.50.
Among the 30 companies listed on Sensex, NTPC, State Bank of India, Power Grid, Tata Steel, Tech Mahindra and HCL Technologies emerged as the biggest gainers, while Hindustan Unilever, Nestle, Sun Pharma and Asian Paints saw a dip in their stocks. It was a clear indication of the market's response to the news of Modi's election as the leader of the NDA.
This will be Modi's third consecutive term as the Prime Minister, as the NDA won a whopping 293 seats in the recent Lok Sabha polls. The positive sentiment extended to other Asian markets as well, with Tokyo and Hong Kong trading with gains, while Shanghai quoted lower. In the US, the markets ended on a positive note on Wednesday.
According to V K Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, the market is slowly returning to a state of normalcy after the extreme volatility of the past few days. The global outlook is also favorable, with the possibility of rate cuts by the Fed. The weakening labor market in the US has led to a decline in the US bond yield, which currently stands at 4.29%. This has created an ideal environment for foreign capital inflows.
However, despite the positive developments, the FIIs continue to sell on high valuations in India, especially when compared to the cheaper valuations of Chinese stocks. In the near future, the market may experience some instability due to political factors, as stated by Vijayakumar.
The global oil benchmark, Brent crude, also saw an increase of 0.38% to USD 78.71 per barrel. On Wednesday, Foreign Institutional Investors offloaded equities worth Rs 5,656.26 crore, according to exchange data. This was a bounce back from Tuesday's downfall, as the BSE Sensex saw a jump of 2,303.19 points or 3.20%, settling at 74,382.24, while the Nifty climbed 735.85 points or 3.36%, reaching 22,620.35.
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