A day after the announcement of the Lok Sabha elections, domestic stock market indices Sensex and Nifty, which opened nearly 1 percent higher on Wednesday, May 5, continued to rise in the morning trades.
The Sensex climbed by 2.46 percent, or 1,772.04 points, reaching 73,851.09 at 11:30 am. The index had started the day at 73,027.88, marking an increase of 1.32 percent from the previous close of 72,079.05.
Similarly, the broader Nifty surged by 2.56 percent, or 560.5 points, to hit an intraday high of 22,445, following an opening jump of 243.85 points, or 1.11 percent.
On Wednesday, the Sensex plummeted by 4,389.73 points, or 5.74 percent, ending at 72,079.05, while the Nifty 50 dropped 1,379.4 points, or 5.93 percent, to close at 21,884.5. This decline occurred as the Bharatiya Janata Party (BJP) failed to secure a majority in the general elections, obtaining only 240 seats, significantly below market expectations.
“The market will take some time to absorb the unexpected election results. Stability will eventually return, but volatility will persist until there is clarity regarding the cabinet and key portfolios. A sharp rebound in the market is unlikely in the near term, though sectoral preferences might shift,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
India Vix and Nifty
The market experienced significant volatility, with the Sensex fluctuating by 1,971 points and the Nifty by 653 points. The India VIX, the volatility index, which surged 51 percent to 31.71 during intraday trades on Tuesday before closing at 26.75, further declined to 19.45, suggesting reduced volatility in the near term.
“The National Democratic Alliance (NDA) will form the Modi 3.0 government with coalition partners. This development is likely to boost market confidence in both political and policy stability, leading to a positive recovery moving forward,” stated a report by Axis Securities.
On Tuesday, the Nifty PSE and Nifty CPSE indices, which had dropped by 16.38 percent and 15.04 percent respectively, recovered some of their losses, declining by only 0.67 percent and 0.55 percent respectively.
Among the top gainers on the NSE were Tata Consumer Products (6.30 percent), Hindustan Unilever (6.06 percent), Hero Motocorp (6.46 percent), Mahindra & Mahindra (6.01 percent), and Asian Paints (4.71 percent).
