Market Continues To Consolidate Ahead Of Election Results

Risk aversion in Indian stocks continued on Thursday morning, as the indices opened the session on a negative note. After a stellar rally over the past few weeks, markets faced some resistance this week.

Indian benchmark indices saw a sharp correction on Wednesday's trading session too amid selling pressure ahead of the final phase of Lok Sabha elections.

In the early trade, Sensex and Nifty were 0.2 per cent lower each from the respective previous day's closing. Sensex is now about 1,200 to 1,300 points lower than its all-time high that it tasted last week.

The latest decline could be partly attributable to investors booking profit at higher levels to avoid any potential risks in the market ahead of the Lok Sabha election results.

Lately, barring this week, Indian stock indices continued their rally, reaching fresh lifetime highs, tracking strong global market cues, hopes of Prime Minister Narendra Modi's comfortable return to office, besides other strong macroeconomic fundamentals.

"One strategy is to remain calm, watch the event and take a decision after the election outcome," said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

"There will be heightened volatility on 03 and 04 June. If the exit polls indicate a clear trend, which is favourable from the market perspective, buying decisions will be easy even after a spike in prices."

Investors are now in a wait-and-watch mode ahead of the Lok Sabha outcome. It is now expected that further up moves will depend on the cues from the exit poll estimates, various macroeconomic data that are scheduled later during the week, Q4 India GDP, and US inflation data.

India's GDP grew at a massive 8.4 per cent during the October-December quarter of the financial year 2023-24, and the country continued to remain the fastest-growing major economy. India grew 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22, respectively.

Morgan Stanley in its latest outlook report said most equity and fixed-income markets are largely positive heading into the second half of 2024, as global interest rate cuts are finally on the horizon. The European Central Bank is likely to start cutting in June, the Bank of England in August with the U.S. Federal Reserve predicted to follow in September.

Morgan Stanley Research sees global equities bringing positive returns this year, helped by the macroeconomic environment and the potential for increases in corporate earnings. (ANI)