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Domestic stock market indices Sensex and Nifty opened at record highs Monday led by optimism around the outcome of the ongoing general elections and an increase in inflows from foreign institutional investors (FPIs).
The BSE’s 30-share Sensex opened at an all-time high of 75,655.46, up 245.07, or 0.32 per cent, as compared to the previous close of 75,410.39. The broader Nifty 50 climbed 81.85 points, or 0.36 per cent to open at a lifetime high of 23,038.95.
“Despite Wall Street being closed on Monday for Memorial Day, confidence remains high among Nifty buyers, bolstered by investor optimism about the general elections and a drop in oil prices to $77 a barrel,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
Nifty traders should gear up for a week of potential volatility driven by six big catalysts: exit polls (June 1), May F&O expiry (May 30), US GDP (May 30), India’s GDP (May 31), US PCE Inflation (May 31), and May auto sales number (June 1), he said.
“Another positive for the market is that the FII selling which weighed on the markets this month has declined sharply and FIIs even turned big buyers on Thursday (May 23),” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
The FII selling which began as a trickle in April turned into a flood in May. As per NSDL data, FIIs sold equity for Rs 22,046 crores through May 24. FII selling in the cash market was massive at Rs 33,460 crore.
This outflow was on account of the outperformance of Chinese stocks and the election-related jitters due to low voter turnout in the first three phases.
“The situation is once again slowly changing in favour of the ruling dispensation. The base case scenario appears to be a clear verdict in favour of BJP/NDA,” Vijayakumar said.
Going forward, as clarity emerges on the election front, FIIs are likely to buy in India since they cannot afford to miss the post-election results rally. The rally may begin even before the election results, he said.
Last week, the Sensex and the Nifty surged to new peaks driven by a higher-than-expected dividend payout by the Reserve Bank of India (RBI) to the government for the year 2023-24. The bumper surplus transfer of Rs 2.11 lakh crore boosted investor sentiments as it will help the government narrow the fiscal deficit for FY2025 in the 0.2-0.4 per cent range, market experts said.
On Monday, the NSE stocks that gained the most included Divi’s Laboratories Ltd, Adani Ports, Hindalco Industries, Tata Steel and NTPC Ltd.
