Poll dyNAMO blasts Sensex past 40K

It was a field day for bulls on Thursday as National Democratic Alliance (NDA) returned to power with a thumping majority. 

As early vote counting trends gave a clear mandate to the Narendra Modi-led NDA to form government at the Centre for the second term, BSE Sensex crossed the 40000 milestone, and touched a record high of 40124.96. The broader NSE Nifty too crossed the record 12000 to hit an intra-day high of 12041.15. 

The Sensex opened at 39591.77 while NSE Nifty50 opened at 11901.30. 

But as the day progressed, investors cashed in on the rally across FMCG, metals, banking and financial services sectors, leading the indices to close in red. Sensex ended 298.82 points lower at 38811.39, whereas Nifty closed 80.85 points, or 0.69%, lower at 11657.05, over the previous close.

Abhijeet Bajpai, co-founder & CEO, Avighna Trades said, “It is a big win for BJP and the markets are relieved that the economic policies will not divert in any contradictory manner because of the new government.”

According to him, NDA's win was largely factored in by the markets and the actual result in general is not a big surprise.

“Investors and traders must wait for the correction to enter in the market as going forward the indices may need to consolidate at lower levels. In general, the markets are expected to follow global market sentiments for the next couple of days. Nifty and Sensex may correct about 5% in the next few days. Investors must focus on quality midcaps in infra, financial and banking sectors,” Bajpai said.

Of the 30-stock Sensex, it was a tie between gains and losses. While 15 stocks ended in gains, 15 others reported losses. Major gainers are IndusInd Bank (5.23%), Coal India (1.56%), YES Bank (1.53%), HeroMoto Corp (1.51%), PowerGrid Corporation (1.29%) and ICICI Bank (1.26%), while major losers are Vedanta (-5.53%), ITC (-3.69%), HDFC Bank (-2.94%), Tata Motors (-2.48%), Bajaj Finance (-2.02%) and Sun Pharma (-1.76%).

Of the 50-stock Nifty, 23 reported gains, while remaining ended in losses.

Among 11 sectoral indices on Nifty, leaving Nifty Media (1.32%) and Nifty Realty (0.47%), all others reported profit booking, led by Nifty FMCG (-1.73%), Nifty Metal (-1.48%) and Nifty Financial Services (-0.97%).

According to V K Vijayakumar, chief investment strategist, Geojit Financial Services, political stability is good for the market.

“In the short run, the market is driven by sentiments and in the medium-term hope can sustain the optimism. But, in the long-term only earnings can drive the markets. In the absence of earnings growth, the euphoria will disappear. Therefore, investors should be guarded in their approach to markets,” he said, adding that fundamentals “do not warrant a sustained rally in the short run”, and there are major headwinds being faced by the economy which do not have quick fixes.

According to him, the short-term trend of the market will be influenced by global factors like the trade skirmishes, and domestically by the actions and policies of the new government. The economy is strong enough to overcome the short-term headwinds and cruise towards sustained long-term growth, which will take the market to much higher levels.

Ajay Bodke, CEO PMS, Prabhudas Lilladher, concurred.

“A Herculean challenge awaits the newly elected Modi government on the economic front. Problems galore, and addressing them on a war footing to rev-up the fast slowing economic engine with faltering consumption, moribund private sector investments and anaemic exports should be the first priority. With limited fiscal space and build-up of massive off-balance sheet liabilities, a focused effort to address strong and sustained revenue mobilisation is necessary,” he said.

According to him, a lack of adequate liquidity and high real interest rates are stifling aggregate demand. Sectors like NBFCs, real estate and automobiles are precariously perched, and unless rescued through immediate intervention can further hurtle the economy on a downswing.

Vijaykumar said a strong government can initiate tough reforms. “If the new government does this, the hope rally will continue. At the same time, since the valuations remain elevated negative triggers can lead to corrections. Therefore, unmindful of the short-term volatility, investors should remain invested and continue to invest systematically,” he said.

Bulls vote on their feet

The major economic achievements under NDA government

2014

May 26: Narendra Modi sworn in as PM

Aug 28: Pradhan Mantri Jan Dhan Yojana launched

Sept 25: Make in India’ campaign launched 

Oct 18: The government deregulates diesel prices

2015

Jan 1: Planning Commission replaced with NITI Aayog 

Mar 12: FDI in insurance raised to 49% 

2016

May 1: Pradhan Mantri Ujjwala Yojana lauched 

Nov 8: 500 and 1,000 rupee notes banned

Dec: Insolvency and Bankruptcy Code introduced

2017

Jun 30: Lowest CPI Inflation

Jun 30: Goods and services tax implemented

Nov 17: Moody’s upgrades India’s sovereign rating

2018

Sept 23: Ayushman Bharat launched

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