Stock market news: After the disappointing Lok Sabha Election results, the Indian stock market witnessed intense selling pressure. However, frontline Indian indices bounced back strongly in the following sessions. After a gap of one month post-Lok Sabha polls, the Nifty 50 index has registered its highest-ever monthly gain post-results. In one month, the Nifty 50 index surged from 21,884 (close on 4th June 2024) to 24,286 (close on 3rd July 2024), logging a monthly gain of around 11 percent. Comparing this monthly gain with the previous monthly gains of the 50-stock index after the Lok Sabha election result, this is the highest-ever gain registered by the frontline index, bettering the previous record monthly gain of 8.90 percent post-2004 Lok Sabha election results.
According to stock market experts, this record monthly rise post-Lok Sabha elections can be attributed to the significant fall on the results date, strong buzz around the Q1 results 2024, strong portfolio inflows, political stability, robust economic outlook, positive global cues, and high liquidity in the market.
Speaking on Nifty’s remarkable monthly performance post-Lok Sabha elections, Sugandha Sachdeva, Founder of SS WealthStreet, said, “Nifty has posted impressive returns of over 11% one month after the election outcome, significantly surpassing gains seen in previous election years dating back to 1999. After experiencing a sharp decline on the election day, the benchmark index quickly recovered and surged to new record highs of 24401, rewarding investors with substantial returns.”
The SS WealthStreet expert said that Nifty’s robust post-election performance has been driven by returning portfolio inflows, political stability, strong economic growth prospects, and positive global cues. As the market continues to rally, the upcoming quarterly earnings season and the Union Budget will be key events to watch for future market direction.
Speaking on the reason for such a rise in the Indian stock market post-Lok Sabha election results, Avinash Gorakshkar, Head of Research at Profitmart Securities, said, “The 2024 Lok Sabha election results were quite disappointing for the markets, especially after the Exit Polls predicting a landslide victory for the incumbent Modi government. So, the market witnessed a big fall on 4th June 2024 (around 1380 points fall for Nifty). However, the outcome came in favour of the incumbent government, so a strong bounce back took place. As the market bounced back after a big fall, the 50-stock index registered its highest-ever monthly gain post-Lok Sabah elections.”
Top 5 reasons
1] Return of portfolio inflows: “A major factor driving Nifty’s strong performance has been the resurgence of portfolio inflows into the market. There were significant outflows from domestic equities two consecutive months before the election, but after the election, the Foreign Institutional Investor (FII) money returned. In June, portfolio flows in equities amounted to approximately Rs. 26,565 crore, with an additional Rs. 11,132 crore injected this month to date,” said Sugandha Sachdeva of SS WealthStreet.
2] Broad-based rally: Sugandha went on to add that the rally has been broad-based, where midcap and small caps have outperformed, but essentially, most of the sectors have contributed to the 2,500-point surge in the benchmark index.
3] Positive global cues: “Global cues have also supported the current rally in domestic markets. A rally in US tech stocks and expectations of a Fed rate cut sooner than previously anticipated amid easing inflationary pressure and the cooling labour market in the US have propelled US equities higher,” Sugandha added.
4] Buzz for strong Q1 results 2024: “After the Lok Sabha elections results, the market started to respond to the expectations of strong Q1 FY25 results after the stellar Indian economic growth outlook. The market has reasons to rely on this buzz after the record GST collection reports and high liquidity,” said Gorakshkar.
5] Inclusion of Indian bonds in the global index: The SS WealthStreet expert said that the inclusion of Indian bonds in a key global index from June 28 is anticipated to attract significant flows of around $20-25 billion spread over the next ten months.
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