Sensex bloats 2,507 points before election results; potential dips ahead? experts advise caution

On Monday, June 3, Indian stock market benchmarks Nifty 50 and Sensex soared to record-high levels. The Sensex surged by almost 4%, opening 2,622 points higher at 76,583.29, and closing with a gain of 2,507 points at 76,468.78. Similarly, the Nifty 50 opened 807 points higher at 23,337.90 and closed at 23,263.90, up 733 points.

Key Reasons Behind the Market Surge:

Exit Poll Results:

Exit polls indicated a decisive victory for the BJP-led NDA, projecting over 350 seats out of 543 in the Lok Sabha elections 2024. The anticipation of a stable government contributed significantly to the market optimism.

Strong GDP Data:

The National Statistical Office (NSO) reported a 7.8% growth in India's GDP for Q4FY24 and 8.2% growth for the entire fiscal year, surpassing expectations. Additionally, the fiscal deficit for 2023-24 was reported at 5.63% of GDP, better than the budget estimate of 5.8%.

Across-the-Board Buying:

Investors engaged in widespread buying across various sectors, particularly banking, financial, metal, realty, and oil and gas. The Nifty Bank index and the Nifty PSU Bank index both hit record highs, reflecting strong sectoral performance.

Positive Global Cues:

Positive developments in global markets, including expectations of rate cuts in Europe and the US, alongside improved macroeconomic data from major Asian economies, bolstered investor sentiment.

Market Outlook:

Experts advise caution despite the bullish trend. Apurva Sheth of SAMCO Securities suggests booking profits and waiting for potential dips to re-enter the market. The medium-term target for Nifty is projected around 24,500.

The combination of favorable exit poll results, robust GDP data, broad-based buying, and positive global cues has driven the Indian stock markets to unprecedented heights. Investors remain optimistic, although cautious, about future movements as the markets respond to these positive triggers.