India’s benchmark indexes opened at fresh all-time highs on Monday, aided by strong domestic macroeconomic data and elevated bets of a US rate cut in March, while analysts saw momentum picking up in the ongoing rally after the ruling Bharatiya Janata Party’s (BJP) victory in key state elections.
BJP’s victory is seen as a big boost for Prime Minister Narendra Modi and setting the tone for the 2024 Lok Sabha elections and since the state polls were dubbed as a semi-final to the LS 24, it has eased uncertainty over policy continuation, which may push stock indices Sensex and Nifty higher into uncharted territory.
The NSE Nifty 50 index rose 1.65% to 20,602.50 points, notching a record high for second session in a row. The S&P BSE Sensex was up 1.64% to an all-time high of 68,587.82, as of 9:16 a.m. IST.
To recall, exit polls had earlier suggested an edge for BJP in Madhya Pradesh, a win for Congress in Telangana and Chhattisgarh and a lack of clear mandate in Rajasthan. The actual outcome has thrown a landslide victory for BJP in three states, analysts said adding that exit polls themselves were a positive surprise as compared to what was being anticipated ahead of elections.
PTI quoted VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, sayin: “Market likes political stability and a reform-oriented, market-friendly government. From the market perspective, the results were better-than-expected. The market has already partly discounted a BJP victory with a 500 point rally during the last 4 sessions. But the mood is so exuberant that the rally will continue.”
He said the global backdrop is also favourable with the US 10-year bond yield declining to 4.23 per cent. However, a “restraining factor will be the valuations which are high and will get stretched further with the rally gaining momentum. In the near-term the market will ignore fundamentals and move up but soon high valuations will trigger some selling”, Vijayakumar added.