Indian stock market benchmarks—the Nifty 50 and the Sensex—achieved record-high levels in early trading on Monday, June 3. This surge follows exit polls predicting a substantial victory for the Bharatiya Janata Party (BJP)-led NDA in the upcoming Lok Sabha elections.
Sensex opened 2,622 points higher at 76,583.29, surging 2,778 points, or 3.8%, to a new record high of 76,738.89. Similarly, the Nifty 50 opened 807 points higher at 23,337.90 and climbed 808 points, or 3.6%, to a fresh record high of 23,338.70.
Broader Market Rally
Investors showed confidence across all segments, with midcap and smallcap indices also hitting new highs. The BSE Midcap index rose 4% to 44,560.97, and the BSE Smallcap index increased 3.6% to 48,973.96. Prominent stocks such as SBI, ICICI Bank, Axis Bank, Bharti Airtel, Larsen & Toubro, Mahindra & Mahindra, NTPC, and Power Grid reached new 52-week highs.
Despite the recent three-month losing streak due to election-related volatility, the market rebounded strongly. The volatility index India VIX had surged 91% in May.
Four Key Triggers for the Market Rally
- Exit Poll Results Exit polls have boosted market sentiment by predicting a significant win for the BJP-led NDA. Most polls forecast over 350 seats for the NDA, with some predicting over 400 seats. This potential political stability has fueled investor optimism.
Analysts expect the positive trend to continue, barring any unexpected negative events. “We anticipate Indian equities to rise over the next 3-4 days, with the Nifty reaching a new all-time high this week,” said Amit Goel, Co-Founder & Chief Global Strategist at Pace 360.
- Macro Boost The National Statistical Office (NSO) reported a 7.8% GDP growth for Q4FY24 and an 8.2% growth for the entire fiscal year, surpassing expectations. Additionally, the fiscal deficit for 2023-24 stood at 5.63% of GDP, slightly better than the estimated 5.8%.
“The GDP numbers were better than expected, providing fundamental support to the market,” noted V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. S&P Global’s recent upward revision of India’s rating outlook to positive also contributed to the market’s optimism.
- Across-the-Board Buying The market saw broad-based buying, particularly in banking, financial, metal, realty, and oil and gas sectors. The Nifty Bank index hit a new high of 50,990, while the Nifty PSU Bank index surged nearly 7%. Realty, Metal, and Financial Services indices also experienced significant gains.
- Positive Global Cues Global market sentiment has been buoyed by hopes of rate cuts in Europe and potentially the US in the second half of the year. Positive economic data from major Asian economies, such as Japan’s factory activity growth and South Korea’s rapid industrial expansion, also supported the rally.
In conclusion, a combination of favorable exit poll results, strong GDP data, broad market buying, and positive global cues have driven the Nifty 50 and Sensex to all-time highs. Investors remain optimistic as the Indian economy shows resilience and potential for further growth.
