The Indian stock market indices, Sensex and Nifty 50, saw a fantastic rally and set a record high on Monday, as investor mood was lifted following the BJP's landslide victory in three of the four state assembly elections.
On December 4, the Sensex rose more than 1,100 points to a new high of 68,587.82, while the Nifty 50 rose more than 300 points to a new high of 20,602.50. The surge spread to broader markets, with the Nifty Midcap 100 and Nifty Smallcap 100 indices gaining more than 1% to reach new highs.
The Nifty Midcap 100 index climbed above 44,100, powered by strong increases in companies such as Adani Power, HPCL, Union Bank, REC, PFC, ACC, and Bank of India, which each rose approximately 2-6%.
In the Nifty Midcap 100 index, 85 stocks were trading higher, while 15 were trading worse. The Nifty Smallcap 100 index gained more than 1% to a high of around 14,500, with 80 firms rising. The top gainers on the index included BLS International Services, NLC India, NBCC India, Cyient, Manappuram Finance, CreditAccess Grameen, PNB Housing Finance, and IIFL Finance, among others, with gains ranging from 2-7%.
Broader markets have trounced the frontline indices this year, with the Nifty Midcap 100 index up more than 39% and the Nifty Smallcap 100 index up 48% year to date (YTD), compared to the Nifty 50's 13.5% gain. The Indian stock market's record-high run continued on Monday, extending gains for the fifth consecutive session, as the Bharatiya Janata Party's (BJP's) resounding victory in three of five state assembly elections improved investor mood in anticipation of decreased policy and political risks into 2024.
Furthermore, solid domestic macroeconomic statistics, with India's GDP expanding faster than expected, positive global cues, such as a drop in US bond yields, an increase in foreign capital inflows, and forecasts of no more rate hikes in the US, aided the surge in the Indian stock market. The equity markets were concerned about the outcome of the state elections and what it meant for the general elections in 2024.
"With the outcome overwhelmingly in favor of the incumbent BJP, market confidence in the current dispensation and political continuity following the 2024 Lok Sabha elections will increase." This bodes well for India's macroeconomic and policy momentum, which is now seeing the strongest growth among major nations (both GDP and corporate earnings). We expect market mood to improve further, and the likelihood of a pre-election surge is now fairly compelling, according to Motilal Oswal Financial Services.
The brokerage favors Godrej Properties, Indian Hotels, Lemon Tree Hotels, Sunteck Realty, PNB Housing Finance, Angel One, and Global Health among midcap companies.
