The markets are likely to have taken the Modi 3.0 government in stride
and are expected to consolidate around current levels after last week’s rollercoaster ride. But expensive valuations and volatile FPI behaviour will cap any meteoric rise, analysts said.
They are of the view that the overall sentiment will remain positive with stock specific action as the new government outlines its priorities.
While they do not rule out profit booking after the recent rally, the focus will be on the upcoming Union budget and the progress of the monsoon.
Last week, the bourses felt the poll tremors as it moved both ways after the results were declared.
After plummeting more than 4300 points last Tuesday, the benchmark Sensex clawed back lost ground on hopes of a stable government and ended the week with gains of 2732.05 points or 3.69 per cent.
On Friday, it closed at a record high of 76693.36, marking a gain of 1618.85 points or 2.16 per cent over the previous close. During intra-day trades, it vaulted 1720.8 points to hit a new record peak of 76795.31.
“The markets have now taken in its stride that we will have a coalition government. This is not for the first time this is happening in Indian politics. It will now be business as usual, but the major difference will be that the BJP will have to consult its allies for any major decision making,” Arun Kejriwal, founder, KRIS, an investment research firm, told The Telegraph.
He added that the benchmark indices could touch new highs and the trend will be positive.
While foreign portfolio investors (FPIs) have been big sellers in recent sessions, market circles said they were net buyers last Friday. ``They were bearish last month, now they seem confused. Over the next fortnight, they could be back once they realise that nothing has changed in India,’’ Kejriwal said.
V.K. Vijayakumar, chief investment strategist, Geojit Financial Services, feels otherwise. “The FPIs regard Indian valuations to be very high and, therefore, capital is getting shifted to cheaper markets. The FPI pessimism regarding Chinese stocks appears to be over and there is a trend of investing in Chinese stocks listed in the Hong Kong Exchange since the valuations of Chinese stocks have turned very attractive.’’
He said after the huge volatility witnessed in the market in response to the election results which includes both exit polls and actual results, the market is now stabilising.
SC probe call
A plea has been filed in the Supreme Court, seeking directions to the Centre and the Securities and Exchange Board of India to submit a detailed report into the stock market crash on the day of election results on June 4.
The plea, filed by advocate Vishal Tiwari, also sought direction to the government and Sebi to submit a report on the orders given on January 3 for considering the suggestion of the expert committee in its report on the PIL in Adani-Hindenburg matter.
The top court had said the Centre and Sebi should constructively consider the suggestions of the expert committee and take any further action necessary to strengthen the regulatory framework, and ensure the orderly functioning of the securities market.
“It is said that after announcements of exit polls in respect to the Lok Sabha 2024 results, the share market went high, but when the actual results were announced the market crashed,” the plea said.
“Stock market volatility again emerged. As per news reports, the loss was ₹20 lakh crore. This again has raised question mark on the regulatory mechanism... despite this court’s direction, nothing has changed,” the petition said. The Telegraph had put the loss to investors at ₹31 lakh crore. With inputs from PTI
