Indian stock market hits $5 trn for the first time ever; volatility expected ahead of election results

Indian benchmark indices ended mixed in a choppy trade on Tuesday, with BSE Sensex settling in red, snapping three-session gain, while NSE Nifty closed higher for the fourth consecutive session. Investors turned jittery as cautious comments from U.S. Fed officials dented sentiment, while general election-led volatility also triggered sell-off in the market. India VIX, a volatility gauge often nicknamed the fear index, hits 22.3 in intraday, the highest level since February 2022, as the Lok Sabha Election approaches its final stages.  

During the session, the market capitalisation (m-cap) of all BSE-listed companies hit a record high of $5 trillion (or over ₹414.46 lakh crore) for the first time, gaining over $633 billion in the calendar year 2024, with Sensex rising 2.3% year-to-date (YTD). It took barely six months to rally from $4 trillion in November 2023 to $5 trillion mark, driven by pre-election rally and stronger-than-expected corporate earnings in the March quarter. The m-cap of BSE-listed firms touched the market cap of $1 trillion in May 2007; followed by $2 trillion in July 2017; and $3 trillion mark in May 2021.

In the volatile trade, the BSE Sensex ended 52.63 points, or 0.07%, lower at 73,953, and the NSE Nifty closed at 22,529, up by 27.05 points, or 0.12%. During the session, the Sensex touched an intraday high of 74,189, while it hit an intraday low of 73,762. On the other hand, the NSE Nifty touched intraday high of 22,591 and 22,404, respectively. The m-cap of BSE-listed stood at $4.97 trillion at the close of day’s trade.

The broader market also witnessed mixed trend, with the BSE Midcap index closing 144 points, or 0.34%, higher at 43,192. However, the BSE Smallcap index closed at 47,874, down by 86 points, or 0.18%.

On the sectoral front, metal index topped the chart with a 4% gain, followed by PSU index, which rose 2%. The FMCG and IT index were among worst performers with a loss of 0.51% and 0.46%, respectively.

Among individual stocks, Tata Steel, JSW Steel, Power Grid Corporation of India, Tech Mahindra, and NTPC were top gainers. On the other hand, Nestle India, Maruti Suzuki India, IndusInd Bank, ICICI Bank, Hindustan Unilever were among notable losers.

According to market analyst, volatility is expected to remain high in near term amid concerns over general election results.

“With the end of the election phase approaching and the verdict nearing, volatility is likely to stay high. Therefore, traders should avoid complacent bets and prioritise regularly booking profits. Additionally, monitoring global developments is crucial, as any issues could potentially impact the recent run, says Rajesh Bhosale, Technical Analyst, Angel One.

Echoing the same, Vinod Nair, Head of Research, Geojit Financial Services, says, “As the general election approaches its final stages, volatility is anticipated to remain elevated. However, despite the ongoing volatility, the market has nearly recouped the losses from the previous peak. Metal stocks saw an uptick, propelled by increasing commodity prices, while the midcap index touched a new high.”

Rupak De, Senior Technical Analyst, LKP Securities, says the Nifty index remained within the range of 22,400 and 22,600. “Strong put writing at 22,400 and 22,500 might provide support to the Nifty. On the higher end, a decisive move above 22,600 might induce a rally towards 22,800 in the near term. Till then the index might continue consolidating as long as it remains within the range of 22,400 to 22,600."

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