Indian stock market hits mid-August lows after a 6-day Sensex fall; further declines are probably in store?Indian stock market hits mid-August lows after a 6-day Sensex fall; further declines are probably in store?Boom, Rs 7.5 lakh crore! What investors should know about the BJP’s victory in Haryana
With the results of the state Assembly election published during the day, the street favorite Bharatiya Janata Party (BJP) astonished everyone by managing to keep control over Haryana. Smallcaps, microcaps, and PSU stocks celebrated the triumph with great zeal, and the Sensex concluded with a 585-point gain.
With the exception of metals, all sectors saw a broad-based rise. As a result, the market capitalization of all listed businesses on the BSE increased by Rs 7.5 lakh crore, to Rs 459.5 lakh crore.
PSU equities were the largest beneficiaries of the BJP’s win; the BSE PSU index finished 2% higher, with HUDCO and RVNL driving the upward trend with an 8% surge. Several equities closed the day 5–6% higher, including PFC, IRCON, IRFC, MMTC, HAL, REC, AND BEL.
With Adani Transmission driving the surge, shares of the Adani Group companies—many of which are also capital expenditure plays—also increased by up to 7%. Adani Ports, the conglomerate’s cash cow, and Adani Enterprises, its flagship company, closed 5% higher.
The markets will benefit from Haryana’s victory since it indicates that economic policies would not change.
“The BJP’s win in Haryana comes as a boost to their campaign following their slight defeat in this year’s Union elections. According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, “the victory in Haryana also sends a message that farmers are with the ruling dispensation and this has the potential to slowly revive the farm reforms which had to be shelved following the farmers protests.
Stock investors have favoured the BJP because of its steady leadership and reputation as a pro-business party. The outcome of the Haryana election is not very significant, but it is viewed as a gauge of the BJP’s standing in the wake of the June Lok Sabha scandal.
“The market was not prepared for the improved outcome of the Haryana election. PSU stocks are rising because the storyline that the administration would become more populist is no longer being accepted. The government controls these PSUs’ order books, and as a result, the market is now acting optimistically, according to ETMarkets analysis from Sunny Agrawal, Head of Fundamental Equity Research at SBI Securities.
The market ended its six-day losing skid once the election results were sufficiently positive. Nifty also closed above the 25,000 mark after declining by about 6% from its all-time highs.
“After a protracted length of time in an overbought zone, the market needed this dip to spark new purchasing activity at lower levels. Nifty50 is still trading above its 100-day Exponential Moving Average (EMA), which is located close to 24,400, which also happens to be the 78.6% Fibonacci retracement level of the previous upswing, despite the recent pullback. The 14-day Relative Strength Index (RSI) is beginning to show divergence, suggesting that the current downward trend may be coming to an end “said Master Capital Services’ AVP of Research & Advisory Vishnu Kant Upadhyay.
In the near future, he anticipates that Nifty will move inside a wider horizontal band between 24,400 and 25,650.
The market will be closely monitoring the RBI policy decision going ahead, as a reasonable shift to neutral is anticipated but no reduction is predicted. Investor attention will also be focused on the impending Q2 results, when earnings should slightly increase on a quarterly basis.
“Earnings are the most important thing to the markets, and they have reacted favorably to the recent general election results, allaying some of the earlier fears. State elections are mostly routine, but there are some notable outliers in important states like Uttar Pradesh and Maharashtra, according to Aman Soni, Head of Operations at Prudent Equity.
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