Bengaluru: A day after the markets posted their worst day in 40 years, benchmark indices BSE Sensex and NSE Nifty50, on Wednesday, staged a comeback, assured by the NDA allies sticking with Bharatiya Janata Party enabling Prime Minister Narendra Modi to form a government for a third term.
The 30-share Sensex jumped 2,303.19 points, or 3.20%, to settle at 74,382.24. During the day, it rallied 3.40%, to 74,534.82. The 50-share Nifty climbed 735.85 points or 3.36% to 22,620.35.
The Nifty saw its best percentage gain since February 1, 2021, when union budget-related announcements drove the market up nearly 5%. Investors on the Bombay Stock Exchange became richer by Rs 13.22 lakh crore.
"Indian markets exhibited a spirited recovery driven by broad based buying across various sectors, as political stability appears assured. However, attention will remain on the formation of the government and the forthcoming RBI policy meeting,” said Vinod Nair, Head of Research, Geojit Financial Services.
The RBI’s Monetary Policy Committee’s meeting is being held from June 5-7, and the rate-setting panel is expected to announce its decision on Friday. Analysts expect a status quo.
Modi is set to form the government after key allies including Telegu Desam Party’s Chandrababu Naidu and Janata Dal (United)’s Nitish Kumar confirmed their support. Investors clearly welcome the prospects of political stability and policy continuity.
All the 30 Sensex companies ended in the green, with IndusInd Bank jumping nearly 8%. Tata Steel, Mahindra & Mahindra, Bajaj Finance, Kotak Mahindra Bank, Axis Bank, HDFC Bank, Hindustan Unilever, and JSW Steel also emerged as the big gainers.
In the broader market, the BSE midcap gauge jumped 4.41% and smallcap index rallied 2.93%.
"Over the next few days, there could be a lot of action around NDA staking the claim to form the government, and thereafter a lot of noise could be around key portfolio/ministry allocation which will keep the equity markets volatile," Rupen Rajguru, Head Equity Investments and Strategy, Julius Baer India, said.
All the indices ended in the green, with telecommunications soaring 6.01%, services jumping 5.74%, metals 5.36%, automotives 4.50% and commodities 4.48%.