Historic Day For Nifty, Sensex Post Exit Polls: What To Expect Tomorrow?
Nifty and Sensex surge post-exit polls as Modi leads. Learn what this means for tomorrow’s market.
Market Optimism Following Exit Polls
This past weekend, the financial markets breathed a collective sigh of relief. Previously prevailing fears, which had driven foreign investors to sell, were proven baseless by the recent exit polls. These polls predict a decisive victory for Narendra Modi's NDA, forecasting another five-year term at the forefront of the world's fastest-growing major economy. According to a composite of these polls, the NDA could secure between 355 and 370 seats, while the opposition INDIA party may garner 125 to 140 seats.
Stock Market Today
In response to these predictions, the Indian stock markets surged on Monday, marking their best performance in three years. The better-than-expected GDP data, early monsoon, higher GST collections, and positive global markets also added fuel to the rally. The Nifty increased by 3.25% and the Sensex by 3.39%, reaching 76,469 points.
While impressive, this increase is modest compared to the Sensex's peak at 75,400 in the last week of May, indicating that the markets had already been anticipating an NDA victory.
Potential Market Movements and Investor Sentiment
Investors are now keenly awaiting the actual counting day. Any significant deviations could lead to sharp market fluctuations. If the results align with the exit polls, we may not see any significant movement. However, if the BJP surpasses its '400-plus' target, June 2024 could mark a historic month for the capital markets. On the other hand, a weaker-than-expected result could lead to a more substantial market correction.
Market Outlook and Investment Strategy
Historically, immediate market rallies following election results tend to be short-lived. Investors quickly turn their focus back to macroeconomic indicators, corporate earnings, and valuations. Peter Lynch's advice, "Know what you own, and why you own it," remains relevant, especially as markets may see profit-booking in overvalued sectors such as public sector enterprises and certain thematic stocks before the Budget. Additionally, the actions of Foreign Institutional Investors (FIIs), who hold about 15-17% of the market, are pivotal and can significantly influence market trends.
The upcoming full budget will be particularly scrutinized, although the interim budget has already reassured the markets of the government's commitment to fiscal discipline. Major reforms or tax changes, unless unexpected, are unlikely to significantly sway the markets beyond the effects of a positive election outcome.
In summary, once the initial reactions settle, the market will respond to the government’s initial 100-day agenda, monsoon progress, institutional activities, and geopolitical developments. For long-term equity investors, the advice remains consistent: stay invested and focus on selective stock picking.
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