After a roller-coaster ride that saw the Sensex at one stage plunging by over 800 points, the benchmark index on Monday staged an intra-day recovery of around 1,000 points and closed with a smart gain of 139 points on prospects that the ruling BJP is set to retain power in Gujarat and topple the Congress in Himachal Pradesh.
The market started on a jittery note with the Sensex crashing 867 points to go below the psychological 33,000 and the NSE Nifty plunging 258 points within one hour of counting of votes that showed Congress was leading the tally in the Gujarat counting. However, the tide turned as the BJP came back and started to take lead in a majority of seats.
With the BJP taking the lead in a majority of seats, the 30-share BSE index hit a high of 33,801.90 and settled up 138.71 points, or 0.41 per cent, at 33,601.68, its highest closing since November 29 when it had closed at 33,602.76. The gauge gained 409.93 points in the previous two sessions after exit polls had predicted BJP win in Gujarat and Himachal Pradesh assembly polls.
The 50-share Nifty reclaimed the key 10,300-mark to close higher by 55.50 points, or 0.54 per cent, at 10,388.75, its highest closing since November 27. It moved between 10,074.80 and 10,443.55 intra-day. It was an extremely volatile session with the Sensex swinging over 1,200 points through the day and the Nifty 369 points.
According to Election Commission tally at 6.30 p.m., the BJP had won 93 seats and was leading in 6 for a possible total of 99 in the 182-member Gujarat assembly. Congress won 75 seats and was leading in 2 seats. In Himachal Pradesh, the BJP won 31 seats and was ahead in 13 seats while the ruling Congress won 17 and was ahead in 4 in the 68-member house.
Anita Gandhi, Whole-time Director, Arihant Capital Markets, said, “equity markets underwent a very volatile session after seeing sharp dip of around 2 per cent points in the morning trade, before the final outcome of Gujarat elections. As the vote count came in the favour of BJP, indices staged a smart and fast recovery. Overall it was an exciting trading session. Going forward, outlook remains to be positive with focus on housing, cement, infrastructure and metal stocks. The structural bull market sentiment will continue. However some year-end profit taking by FIIs cannot be ruled out.”
Arun Thukral, MD & CEO, Axis Securities, said, “markets have celebrated the BJP win, though it went through jitters in initial phase when both the parties were moving neck to neck in their tally. Markets will take the win affirmatively as a reposing of faith and continuity of policies at the centre. Given that the mandate is slightly lower than that in 2012, it would be a signal for the government at centre to speed up on the unfinished agenda of creating jobs, empowerment of women, improvement in earnings and living condition of the lower class and rural population, creation of better infrastructure, livable spaces for the urban folks etc. Now the markets will focus on the forthcoming events viz., quarterly earnings starting January 2018 and Budget 2018 to see how the corporate earnings fare in Q3 and the outlook for the next financial year respectively.”
“While market sentiment ebbed and flowed, as election results trickled in, PSU bank stocks marched ahead in anticipation of bank recapitalisation updates from the Parliament’s ongoing winter session. Investors will now also focus on developments on the GST front, including implementation of e-way bill mechanism,” said Anand James, Chief Market Strategist, Geojit Financial Services.
The rupee, which had earlier crashed, making up much of its losses against the dollar came as a big source of support.
M&M gained 2.71 per cent, while Sun Pharma and SBI rose up to 2.06 per cent. Yes Bank, Coal India, Infosys, ITC, Kotak Bank, HDFC and NTPC succumbed to rush for taking profit, which narrowed the gains. The metal index advanced 1.83 per cent, followed by auto consumer durables and healthcare. However, realty finished in the negative zone.
Given the improvement in sentiment, the broader markets played along, with the mid-cap index rising 0.76 per cent and small-cap 0.45 per cent. Domestic institutional investors (DIIs) offloaded equities to the tune of Rs 635.44 crore while foreign portfolio investors (FPIs) net sold shares worth Rs 921.03 crore last Friday, provisional figures showed.
Sameet Chavan,Chief Analyst, Angel Broking, said, “we witnessed a V-shaped recovery throughout the remaining part of an opening hour. Eventually, the Nifty managed to close with gains of over half a per cent. It was kind of jigsaw ride for our markets today as we saw wild swings in the initial hour of the trade. Due to sharp recovery in the first half, the Nifty managed to surpass the recent swing high of 10410 on an intraday basis. But a closing above this could have been a trend deciding move in the near term and hence, bears somehow managed to defend this level on a closing basis.