The bulls were calling the shots once again as domestic indices raced to their all-time highs owing to the massively successful election campaign of the BJP led National Democratic Alliance (NDA). The alliance is widely considered to be the most corporate friendly and development oriented of all the contesting political parties. NDA’s win was so comprehensive that Narendra Modi led Bharatiya Janata Party managed to secure an absolute majority, winning more than 272 seats, the first time in 30 years. Narendra Modi is now set to become the next prime minister of India.
Domestic indices gained right off the bat as exit polls, which concluded on Monday, 12th May, indicated that Bharatiya Janata Party’s prime ministerial candidate, Narendra Modi was on course to clinching the top job in the country. The election euphoria continued through most of the week, as investors shrugged off some weak macroeconomic data releases, like Index of Industrial Production (IIP) and Consumer Price Index (CPI) numbers, which came up short. Thursday’s trading session showed a glimpse of what was to come, as key indices broke existing highs to lock on new ones.
All of this culminated into a blockbuster showing during the final trading session, 16th May, also the election result day. The early morning vote count saw BJP led NDA take a clear lead, making it apparent that a new government was in the making and Narendra Modi was going to be at the helm of it. Consequentially, key benchmark indices raced to significant new highs. Sensex raced to a lead of 1500 points, breaking through the psychological mark of 25,000, while the 50 share CNX Nifty breached the 7500 mark.
However, things appeared to settle down during the afternoon session as investor looked to book profits. S&P BSE Sensex shed nearly 1200 points during this period to close trade with relatively modest gains of 0.9% or 216 points. This was somewhat expected as markets had already priced in the likelihood of BJP coming to power over the last month or so.
Over the week, Sensex gained a massive 1,128 points for 4.9% to close the week at 24,122. CNX Nifty delivered slightly higher returns of 5.02%. Broader indices underperformed as BSE Midcap rose by 4.15%, while its small cap counterpart gained 3.85%.
On the sectoral front, Realty was the top performer. The sector gained a massive 13% during the week, preceded by PSUs and the power sector, both of which were up by about 12%. Other sectors to end the week in green include Oil & Gas, Metal etc. The only sector to close the week in red was Healthcare, which was down 3.3%.
Foreign Institutional Investors poured in heavily during the week in anticipation of NDA’s victory. Net inflows in the equity space stood at Rs 7300 crores. FIIs also stood net buyers in the debt segment, with net inflows of Rs 3701 crores.
