The Indian stock market had a great run on Friday, with benchmark indices Sensex and Nifty rallying nearly 2.5% each to register their biggest single-day gain in five months after exit polls predicted that the BJP-led National Democratic Alliance (NDA) would come back to power in Maharashtra. In a historic mandate, the ruling Mahayuti alliance of the BJP, Shiv Sena (Eknath Shinde faction), and NCP (Ajit Pawar faction) secured 233 of the state’s 288 assembly seats, at a strike rate of nearly 81%.
According to market analysts, the one-sided victory of NDA alliance in Maharashtra state elections 2024 is likely to boost market sentiment on Monday. “The stability In Maharashtra could trigger a rally in the stock market, boosting investor confidence due to the continuity of pro-business policies, especially after uncertainty following previous coalition shifts,” says Palka Arora Chopra, Director of Master Capital Services Ltd.
“With a clear mandate, the government is likely to push forward with infrastructure projects, a key focus of the BJP, which would benefit the construction, real estate, and related sectors,” says Chopra
Santosh Meena, Head of Research, Swastika Investmart Ltd, also opines that the outcomes of state elections results will be crucial triggers, especially Maharashtra where NDA witnessed one sided victory. He adds that ongoing geo-political tensions, rising crude oil prices, strengthening dollar index, and foreign funds flow are likely to pose significant risks for the market.
“Additionally, interest in Chinese markets is fading, making Indian valuations more appealing post-correction. Global triggers, including US economic data such as PCE inflation, GDP growth rates, and FOMC meeting minutes, will play a critical role in shaping investor sentiment. Commodities and geopolitical developments will also remain vital factors influencing global market trends,” adds Meena.
On the technical front, Nifty found strong support at 23,200, which aligns with the 61.8% retracement of its previous rally from the election-day low of 21,281 to the high of 26,277. “The index reclaimed its 200-DMA with a bullish harami candlestick formation, signaling a potential trend reversal. Immediate resistance is at the 20-DMA of 24,030, and a breakout above this level could push Nifty toward 24,550/25000 levels.”
“On the downside, 23,500, near the 200-DMA, remains a critical support level. Similarly, Bank Nifty has held firm at its 200-DMA, with immediate resistance at 51,300–52,000 and a higher resistance zone at 52,600–53,300,” says Meena.
Vinod Nair, Head of Research, Geojit Financial Services, says as most of the state elections are now over, the market may find stability as government spending will improve in the coming months to meet the FY25 capex target, which will support private spending. “Good monsoon, festival and marriage season may color consumption demand. The upcoming economic indicators like PMI data, IIP, and inflation will be keenly watched by investors for a resemblance of a 10 to 12% corporate earnings growth in H2FY25," he says.
“Many of the blue chips are available at below-average valuations, while meaningful corrections in mid and small cap indices provide opportunity for broad-based momentum. Sectors like realty, FMCG, auto, consumption, banks, and IT gained more than 2%. Favorable U.S. job data and appreciation in dollar to support domestic IT stocks,” adds Nair.
On Friday, the market recouped current week’s losses on the last day of trading with a strong bounce back as investors used the bargain opportunity to accumulate beaten-down stocks. Investors shrugged off Adani fears and expected state election results would bring more stability to the market.
The BSE Sensex gained 1,961 points, or 2.54%, to end higher at 79,117 level, and the Nifty rose 2.4% to close at 23,907, up 557 points. All sectoral indices ended in the green zone, led by Nifty IT, which jumped over 3%, buoyed by robust U.S. labour market data as the initial jobless claims fell to a seven-month low in November.
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