Mumbai. Recovering from the shock of the election results, the local stock markets made a strong comeback on Wednesday and the BSE Sensex jumped by more than 2,300 points. The NSE Nifty also gained 735 points. On Tuesday, the stock market had the biggest one-day fall in four years due to the Lok Sabha election results not being as expected. The market has risen after the BJP-led National Democratic Alliance (NDA) allies held talks on government formation.
The 30-share Sensex closed at 74,382.24 points with a gain of 2,303.19 points or 3.20 percent. During trading, at one time it had climbed up to 2,455.77 points. The market was bullish due to buying in the shares of banks, automobile and petroleum companies. The National Stock Exchange’s Nifty also jumped 735.85 points or 3.36 percent to close at 22,620.35 points. During trading, at one time it had climbed up to 785.9 points. All the shares included in Sensex and Nifty remained in profit.
The market rose due to heavy buying in HDFC Bank, ICICI Bank and Reliance Industries. The rise in the market on Wednesday gave investors a profit of Rs 13.22 lakh crore. The BJP-led NDA has crossed the majority mark of 272 in the 543-member Lok Sabha. But the BJP has fallen short of the majority mark for the first time since 2014 and will have to depend on its allies to form the government. The Election Commission has declared the results of all 543 Lok Sabha constituencies. In this, the BJP won 240 seats and the Congress won 99 seats.
Meanwhile, the BJP-led NDA discussed various aspects of government formation in a meeting here on Wednesday, a day after the ruling alliance secured a majority in the Lok Sabha elections. Alliance partner TDP has reiterated its support to the NDA. This has eased investors’ concerns about government formation and buying was seen in the stocks which had fallen recently.
Vinod Nair, Head of Research, Geojit Financial Services, said, “With stability being ensured at the political level, the market returned to a boom with all-round buying. However, all eyes will be on the formation of the government and the monetary policy to be presented this week.” Among the Sensex stocks, IndusInd Bank was up more than seven percent. Apart from this, Tata Steel, Mahindra & Mahindra, Bajaj Finance, Kotak Mahindra Bank, Hindustan Unilever, HDFC Bank, Axis Bank and JSW Steel were also major gainers.
According to the report of Motilal Oswal Research, “Despite the BJP not getting an absolute majority, we estimate that the policy agenda of Narendra Modi’s second term (investment-led growth, capital expenditure, investment on infrastructure, manufacturing, etc.) will continue. However, it is possible that there may be some changes in it.” It said, “Given the way the election results have come, we also expect that some populist schemes may be announced to address the problems of villages.” The BSE Midcap, representing the shares of mid-sized companies, rose 4.41 percent while the Smallcap index, representing the shares of small companies, rose 2.93 percent.
In other Asian markets, South Korea’s Kospi was in profit while Japan’s Nikkei, China’s Shanghai Composite Index and Hong Kong’s Hang Seng were in loss. There was a bullish trend in early trade in major European markets. The US market was in the lead on Tuesday. Global oil benchmark Brent crude was up 0.14 percent at $ 77.61 per barrel. According to stock market data, foreign institutional investors sold shares worth Rs 12,436.22 crore on Tuesday. The BSE Sensex fell 4,389.73 points on Tuesday. On the other hand, the NSE Nifty plunged 1,982.45 points. This was the biggest fall in a day in the last four years.