Assembly Elections Unleash Bull In The Market; Benchmark Indices Hits Historic-highs

The Indian market cheered investors as the ruling party secured victories in three out of four states. Benchmark indices, Nifty, Sensex, and Nifty Bank surged to their highest peaks with a substantial gap-up opening on the first trading session of the week.

The National Stock Exchange (NSE) Nifty 50 index concluded with a gain of 2.07 per cent, reaching new levels at 20,686. The S&P Bombay Stock Exchange (BSE) Sensex settled with a 2.05 per cent or 1383 points gain at 68,865, just 135 points away from its untouched levels of 69,000.

The benchmark index Nifty Bank gained 1617 points or 3.61 per cent intraday, with large-cap contributions from ICICI Bank, SBI, Kotak Bank, etc. All the stocks in the index traded with gains ranging from 5 per cent to 1 per cent.

Among the Nifty50 index, the 'winner of the day' was claimed by Eicher Motors, recording the highest gains of 7.43 per cent. Adani Conglomerate stocks, Adani Enterprises and Adani Ports, also gained 7.13 per cent and 6.14 per cent, respectively.

Notably, only four stocks, including HDFC Life, Britannia, Wipro, and Titan, traded in the laggard segment with marginal gains.

“The rally was on expected lines as the ruling party's strong performance in state elections gave confidence to investors that culminated into a massive upsurge with key benchmarks scaling record highs. India's strong growth prospects going ahead along with moderating inflation and the return of foreign investors should augur well for domestic markets in the run-up to the Union Budget in February,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.

Despite overbought technical conditions, the good news is that the short-term technical outlook for Nifty continues to favor the bulls, with support placed at 20,529-20,321 levels and resistance at 20,750 to 21,051, added Tapse.

In terms of sectoral performance, PSU Banks outperformed every other index with a 3.85 per cent gain, followed by Nifty Realty with gains of 2.03 per cent, and Nifty Metal gaining 1.63 per cent.

Conversely, in the bullish market, Nifty IT remained sluggish and moved merely 0.21 per cent higher, whereas Pharma and Media slipped 0.18 per cent and 0.78 per cent, respectively.

Furthermore, the more domestically focused indices mid-cap and small-cap mirrored each other and rallied 1.24 and 1.39 per cent, respectively.

“With the overhang of state poll results now behind us, investors are likely to bet big on a major policy push in the run-up to the General Elections next year, which is likely to reflect well on domestic equity markets amid strong (and growing) retail investor participation. The recent macro data numbers along with global rating agencies upgrading growth forecasts indicate India remains a bright spot in a still challenging global economy. While flows from retail investors have been good so far, the overall long-term growth prospects could drive the momentum going ahead,” said Shiv Sharma, India-Head, Stocktwits.

Among Nifty 50 mid-cap stocks, Hindustan Petroleum topped the index with nearly a 9 per cent rally after the global brokerage firm, Morgan Stanley affirmed the substantial rally of stocks in the next 30 days. ABB India, Shriram Finance, REC, and Canara Bank also rallied more than 4 per cent during the session.

Contrastly, Zee Entertainment remained dull in the market with its 4 per cent downward movement followed by Lupin, Jindal Steel, Abbott India, L&T Technology, and Ashok Leyland, which lost more than 1 per cent on the index.

Among individual stocks, blue-chip ICICI Bank jumped more than 5 per cent to an 11-week high on multiple block deals.

Som Distilleries and Beverages surged to nearly 5 per cent after the firm received the Karnataka Excise Department’s approval for its premium beer brands' supply in Tamil Nadu, India.

Bharat Electronics gained more than 4 per cent to hit its record high of Rs 155. On the other hand, auto stock Eicher Motors rallied 7.43 per cent after the firm reported a 5.7 per cent increase in sales of buses and trucks on a yearly basis.