Monday, July 15, 2024

Sensex and Nifty Back Rebound in Early Trade After Massive Drop

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The Indian stock market saw a positive turn on Wednesday as benchmark indices Sensex and Nifty rebounded back in early trade. This comeback follows a significant drop in the previous session, driven by value-buying at lower levels.

The 30-share BSE Sensex surged 948.83 points to reach 73,027.88 in the morning trade. Similarly, the NSE Nifty rose by 247.1 points, hitting 22,131.60. This recovery comes after a heavy decline on Tuesday, where the Sensex nosedived 4,389.73 points, or 5.74%, ending at a two-month low of 72,079.05. The Nifty also experienced a sharp fall, tumbling 1,379.40 points, or 5.93%, to close at 21,884.50.

Despite the market’s recovery, political uncertainty looms as the BJP, while remaining above the majority mark of 272 seats in the Lok Sabha, fell short of the magic number for the first time since 2014. This makes the party critically dependent on its allies for government formation. The Election Commission declared results for all 543 Lok Sabha constituencies, with the BJP winning 240 seats and Congress securing 99.

Analysts at Motilal Oswal Research expect the policy agenda of Modi 2.0 to continue, focusing on investment-led growth, capex, infrastructure creation, and manufacturing, albeit with some populist measures to address rural stress.

Sensex and Nifty rebound in early trade Chart

Among the 30 Sensex companies, Hindustan Unilever, Nestle, Asian Paints, HCL Technologies, HDFC Bank, Kotak Mahindra Bank, and ITC emerged as the biggest gainers. However, Larsen & Toubro, Power Grid, NTPC, and State Bank of India were among the laggards.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, mentioned that the market will take some time to absorb the unexpected election results. He expects stability to return soon but anticipates continued volatility until there is clarity on the cabinet and key portfolios. He also noted that the recent market correction has moderated excessive valuations, potentially facilitating institutional buying once clarity on the government formation emerges.

In other markets, Seoul and Hong Kong showed gains, while Tokyo and Shanghai traded lower. US markets ended positively on Tuesday. Global oil benchmark Brent crude slightly dipped by 0.04% to USD 77.49 per barrel.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 12,436.22 crore on Tuesday, contributing to the sharp decline. The recent market movement highlights the volatile nature of the stock market, influenced by both domestic political developments and global economic conditions.

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