The Sensex made a new record high today, zooming past 40,000 on Lok Sabha election results which have given BJP led NDA a comfortable margin to form a government at the centre for the second time. The Nifty too made a new life time high of 12041. But in the classic case of buy the rumuour and sell the news, by closing Sensex and Nifty gave up all gains to end 0.7% lower.
Metal stocks ran out of favour with investors, as global markets remained weak today with worries of the lingering trade war leading to profit-taking. FMCG index was also a big loser today down 1.7%. Previously beaten down sector media and realty were big winners today.
IndusInd Bank, Zee Entertainment, Adani Ports, Grasim Industries and Cipla were among major gainers the Nifty, while losers were Vedanta, Eicher Motors, ITC, Hindalco and Bajaj Finserv.
Many market watchers believe that the markets are relieved on the prospects on a stable government at the centre which is likely to continue with the reforms like GST and IBC undertaken by Modi government. Foreign investors FIIs have pumped in $8 billion dollars from January till now when the benchmark indices have returned 10% already. After a clear mandate market watchers believe that FIIs activity could actually pick up even more here after a rather lackluster year in 2018.
Industry leaders have also welcomed the new government hoping that continuation of the reform agenda will lead to greater demand and higher growth for the economy. Leading banker Uday Kotak has said,
Time for transformation of India. Time for deep reform. I dream of us as a global superpower in my lifetime. Heartiest congratulations to @narendramodi , the BJP, and the NDA.
— Uday Kotak (@udaykotak) May 23, 2019
Mahindra and Mahindra’s chairman And Mahindra has said,
As I watch the counting,I get the unmistakeable feeling that a turning point in history is unfolding before my eyes. 2 new power blocs are overthrowing the establishment.Not talking about political parties but Women & Young,new voters. Increasingly, they will shape India’s future
— anand mahindra (@anandmahindra) May 23, 2019
All eyes will be on who will be the next finance minister. He will have the unenviable task to steer the economythough a cyclical slowdown which is already showing in auto and FMCG sales slowing down.