The indices recorded their biggest two-week gain in the last five months amid the election rally gripping the pulse on D-Street.
Experts list out 28 stocks to buyMost experts anticipate that the stock market will remain volatile until the final phase of the election on June 1.
"FPIs and FIIs have been on a selling trend in Indian stock markets this calendar year.
The record growth in investor wealth and stock market valuation is supported by strong economic fundamental and progressive government policies."
Indian market valuations are rich, and that may keep the upside capped.
Domestic equity benchmarks Nifty 50 and Sensex settled flat in the previous session, but logged their best week since early February, driven by gains in financials and metal stocks. The indices recorded their biggest two-week gain in the last five months amid the election rally gripping the pulse on D-Street.
Nifty 50 surpassed the 23,000 mark for the first time ever on Friday, while the 30-share BSE Sensex rallied 218.46 points or 0.28 per cent to hit its all-time intra-day high of 75,636.50. The domestic markets were on a record-breaking rally, extending their winning streak for the second straight day on May 24.
Also Read: Will Indian share market continue to correct before Lok Sabha election 2024 result? Experts list out 28 stocks to buy
Most experts anticipate that the stock market will remain volatile until the final phase of the election on June 1. However, they do not expect the market to see a major correction in the run-up to the election outcome. Some say that the Nifty 50 will maintain its gradual upswing above the 23,000 mark, but volatility due to the end of earnings seasons and F&O expiry may trigger a fall to 22,500.
‘’Overall, the combination of favourable domestic developments and positive global cues has significantly lifted market sentiments, driving the benchmark indices to new heights,'' said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.
Markets' Weekly Print
The frontline indices gained 2.2 per cent and 2.02 per cent on the week amid the broader bull run picked up ahead of the Lok Sabha election results on June 4. The weekly rise in the domestic benchmarks was fuelled by foreign investors dialling back bearish bets on domestic equities and the Reserve Bank of India's (RBI's) record ₹2.11 lakh crore dividend payout to the government, marking the highest surplus transfer on record by the central bank.
The surplus will be reflected in the government’s account for the financial year 2024-25, and is expected to help the government reduce its fiscal deficit and boost capital expenditure and global fiscal position. "With surplus liquidity coming back to the system, there's a much lower requirement for the government to raise more funds via bonds," said Aishwarya Dadheech, the founder and chief investment officer at Fident Asset Management.
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Heavyweight financials advanced 1.7 per cent during the week, posting the second straight weekly gain. Top Nifty gainer HDFC Bank added 3.6 per cent in its best week since early April. The auto index added 2.6 per cent, gaining for the fifth straight week. Metals gained 3.9 per cent during the week, mainly led by Adani Enterprises, which surged 10.6 per cent and recovered to pre-Hindenburg levels on reports that it could be included in the Sensex index.
The market capitalisation (mcap) of BSE-listed companies stood at ₹4,19,99,274.85 crore ($5.05 trillion). The mcap of the NSE- listed firms stood at ₹416 lakh crore ($5.01 trillion). Foreign institutional investors (FIIs) toned down their bearish sentiments as the net inflow exceeded the sell-off. FIIs were sellers for three out of four sessions last week yet the total inflow was recorded at ₹1,165.54 crore.
"FPIs and FIIs have been on a selling trend in Indian stock markets this calendar year. From January to May so far, they have net sold around ₹120,000 crore in Indian markets. This is the secondary market outflow. In May we have seen around ₹34,000 crore of FPI and FII selling till May 24th," said Ajay Bagga, banking and market expert.
Also Read: General Elections 2024: Private banks or public sector lenders - who will benefit more from Modi's likely win?
Will the bull run sustain post-June 4? Here's what experts say
Dr. Vijay Kalantri, President – All India Association of Industries (AIAI), Chairman of MVIRDC Mumbai World Trade Center
“India is the shining beacon of stability, growth and resilience in the current global economic order. I am confident that we can soon cross USD 5 trillion economy by 2025 as envisioned by Prime Minister Mr. Narendra Modi."
This is a landmark moment in the Indian capital market as the Sensex crossed all time high of 75,300, all the way up from 24,000 when the Prime Minister took office. The record growth in investor wealth and stock market valuation is supported by strong economic fundamental and progressive government policies."
The expert raised hope that the benchmark Sensex will cross Rs. 1 lakh crore in the near future if the government continues to improve ease of doing business to support manufacturing, trade, services and MSMEs.
Sunil Damania is the Chief Investment Officer at MojoPMS
‘’Voter turnout and its impact on the election outcome is making the market nervous. The market is going with the equation that lower turnout means the BJP may get a lower number of seats as compared to the 2019 election. Our study shows that when BJP replaced the Congress in 2014, voter turnout increased by more than 800 basis points (bps).
We sense that the BJP should get a majority in the parliament without going into the merit of argument about whether lower turnout is better for the incumbent government. If the market falls before the general election outcome, one can expect a rally post-result.
But if there is no meaningful correction, the market may behave like in 2019, where Indices moved down post-election result. Indian market valuations are rich, and that may keep the upside capped. Post-election, the market will start speculating on the budget announcement. This will also keep marketmen busy. Hence, we sense that in the next couple of months market will likely remain volatile.''
Rahul Ghose, CEO, Hedged.in
‘’If the initial knee jerk reaction is on the upside beyond 23,500 on the Nifty, then I expect the trajectory to continue on the upside beyond 24,200. If the knee jerk does not take the Nifty to 23,500, then we expect markets to fall back below the 23,000 levels.
The second half of the year, like the May series, is going to see continued volatility. Either trading hedged strategies or being stock specific is the way to be. I see upside in counters such as Hindunilver, Zomato, IRCTC to name a few."
Santosh Meena, Head of Research at Swastika Investmart Ltd
‘’In the current market scenario, FIIs have been net short, but the market is experiencing a short-covering rally that appears to have further momentum. Despite continuous selling by FIIs in the cash market, there is now an anticipation that they may shift to buying, which would provide additional support to the market.
Looking ahead, the Nifty index may witness further expansion, with the possibility of reaching 24,000 as the election outcome approaches. However, while large-cap stocks are expected to perform well, mid-cap and small-cap stocks may underperform from this point forward.''
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
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