Exit poll euphoria! Sensex surges 2,777 pts to 76,739, Nifty touches 23,339

The domestic benchmark indices opened at fresh record highs on June 3 after the exit polls results indicated a strong mandate for the Bharatiya Janata Party (BJP)-led NDA government. The market witnessed broad-based buying, led by public sector entities, defence, and infrastructure companies, as experts believe that possible election outcome will provide "stability and continuity" in policy-making, with a single-party majority government, which will be expected to continue pushing its economic agenda.

The BSE Sensex opened higher for the second straight session at 76,583, up 2,622 points against the previous closing level of 73,961. In the early trade, the 30-share benchmark rallied as much as 2,777 points to hit a fresh record high of 76,739 mark. Driven by strong rally, the market capitalisation of all listed companies on BSE jumped by over ₹11 lakh crore to ₹423.21 lakh crore.

In a similar trend, NSE Nifty belled the day at a new high of 23,338, up 807 points as compared to Friday’s closing mark of 22,530. Extending opening gains, the Nifty50 surged 808 points to attain a new all-time high of 23,339.

At the time of reporting, the Sensex was quoting at 75,876, up 1,915 points, or 2.6%, and the Nifty was trading 571 points, or 2.53%, higher at 23,101 level.

In sync with benchmark indices, the broader market also saw strong buying, with midcap and smallcap indices trading higher by 2.7% and 2%, respectively.

All 30 shares on the Sensex pack were trading in the green, led by Power Grid Corporation of India, NTPC, Larsen & Toubro, Mahindra & Mahindra, and State Bank of India, gaining in the range of 4-8%.

On the sectoral front, all indices were floating in positive terrain, while power and PSU space were among the top performers.  The BSE Power index surged 6.5%, led by Adani Power, Adani Energy Solutions, Power Grid Corporation, Adani Green Energy, and JSW Energy. The BSE PSU index has also seen strong buying, rising over 5%, led by REC, Power Finance Corporation, Power Grid, NBCC (India), and HPCL.

After the conclusion of the seven-phase of Lok Sabha elections on June 1, most of the exit polls showed that the Bharatiya Janata Party (BJP)-led NDA may win more than 350 seats of the 543 seats in the Lok Sabha polls, while the Opposition INDIA bloc is expected to get close to 150 seats. If exit polls are to be believed, PM Modi is set for a historic third term with a record mandate, which would raise investor confidence in India’s economic growth.

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, says that fundamentals, technicals and sentiments turning favourable at the same time are rare in the market.  “This is what has happened now. The market went into the big event, elections, very light with Nifty correcting around 600 points from the May highs. Profit booking also happened on a large scale. The short position in the market also is high.”

“All these are going to change dramatically. DIIs, HNIs, retail ...are all going to turn buyers. Short-covering can add to the momentum, he adds.

Vijayakumar believes that the rally is likely to be led by largecaps, with stocks such as RIL, ICICI Bank, HDFC Bank, Kotak Bank, Axis Bank, Bajaj Finance, Bharti Airtel, L&T, M&M, Tata Motors, Bajaj Auto, Eicher Motors are fundamentally strong largecaps with potential to lead the rally. IT stocks like TCS, Infy, HCL Tech, Coforge, Persistent and L&T Tech offer contrarian buying opportunities, he adds.

“The GDP numbers which came on Friday were better than expected with 8.2% growth. This will provide fundamental support to the market. S&P’s upward revision of India’s rating outlook also is positive," he says.

Angel One in its technical report says that the Nifty index is situated at a critical zone of make-or-break and the exit poll outcome is likely to trigger momentum in the week. “For now, 22450-22400 is the potent support, while a further drop could disrupt the short-term structure of the technical charts. On the higher end, 22600-22650 is the intermediate resistance, followed by the sturdy hurdle of the bearish gap placed around 22820-22850 subzones.”

The brokerage in its report says that the markets are expected to be vulnerable until the election outcome, and volatility is likely to remain high during this time. The agency advised investors to be cautious in the current scenario. “On the other hand, meeting the street expectations based on the exit polls could toss the indices higher. Therefore, having a solid risk management strategy with hedged positions is wise for market participants.”

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