The Indian stock market benchmarks, the Nifty 50 and the Sensex soared to record-breaking levels in early trade on Monday, June 3rd. This surge followed the exit polls released on Saturday, June 1st, predicting that the Bharatiya Janata Party BJP-led NDA could secure over 350 of the 543 seats in the 2024 Lok Sabha elections. The election season has directly impacted the share markets, leading to massive gains.
A hectic scene unfolded as investors engaged in frantic buying, leading the midcap and smallcap indices to surge nearly 4 percent each, reaching fresh record highs.
The Sensex opened 2,622 points higher at 76,583.29, up from its previous close of 73,961.31, and surged 2,778 points, or 3.8 percent, to reach a new record high of 76,738.89. The 30-share index ultimately closed with a substantial gain of 2,507 points, or 3.39 percent, at 76,468.78, with 25 stocks in the green. Similarly, the Nifty 50 opened 807 points higher at 23,337.90, compared to its previous close of 22,530.70. It rose 808 points, or 3.6 percent, to achieve a new record high of 23,338.70 in early trading. The Nifty 50 ended the day at 23,263.90, up 733 points, or 3.25 percent.
The Nifty index surged over 4 percent to hit a record high of 50,990, driven by increased buying activity. The market rally was led by the banking, financial, metal, realty, and oil and gas sectors. The Nifty PSU Bank index soared nearly 7 percent in morning trade, while the Realty, Metal, and Financial Services indices jumped up to 4 percent.
Adani Ports, Adani Enterprises, Power Grid, Shriram Finance, and NTPC were among the top performers driving the market rally with significant gains. Market sentiment was further bolstered by the latest GDP data, which indicated a robust fiscal growth of 8.2%.
A party or alliance needs at least 272 seats to form a government in the country. The return of the BJP to power seems likely, with an aggregate of 12 exit polls predicting that the ruling NDA alliance will win around 365 seats. Government changes typically introduce risks of volatility and cause disruptions in the share market, even if minor. This is why the market favors political stability.
