Wednesday morning brings back hope for the bleeding stocks again as the bull retains its position in the Indian stock market. The bleeding Dalal Street recovered within a day from its 6 per cent fall. According to market experts, the severe fall in the stock market gave investors the opportunity to buy again. As a result, on Wednesday, June 5, the BSE Sensex and the Nifty 50 gained more than 3 per cent.
The optimistic result of today’s market came as a surprise, considering the day before the stock market experienced a shock wave as the predictions of most of the exit polls went wrong. The exit polls predicted that the Narendra Modi government would cross 400 seats, but when many leaders were trailing behind the leading list, the market started to fall. The severe drubbing of the stock market was never seen in the last four years. At the end of today’s market, the NSE Nifty 50 was up by 735.85 points, which is 3.36 per cent higher at 22,620.35, and the S&P BSE Sensex gained 2,303.19 points, which is 3.20 per cent higher at 74,382.24.
Among Nifty’s stocks, HDFC Bank, ITC, and HUL were the major gainers, whereas NTPC, Hindalco, and L&T were the major laggards. Among sectors, pharma, auto, IT, FMCG, and steel were the top gainers, whereas PSU banks, infrastructure, and PSE were the laggards. The day was favourable for the Adani Group, as the shares of Adani Ports and Special Economic Zone were up by 91.05 points or 7.29 per cent. Even Adani Green Energy of the Adani Group rose by 181 points or 11 per cent.
The Volatility of the Indian Stock Markets
Though Wednesday’s stock market closed with more hope than Tuesday’s market, which had a drop of 6 per cent, the volatility is still there and will continue to remain unless a stable government is formed in the country. Therefore, along with all the countrymen, the foreign investors are also keenly waiting for the formation of the government.
Foreign Portfolio Investors (FPI) since April have been net sellers of Indian stocks and their sudden withdrawal of ₹37,700 crore affected the stock market, according to market dealers. Even they are now cautious in their investments and withdrawal policies in domestic stocks, as they believe that the lower margin win of the Modi government will restrict their decision-making power compared to the last term.
However, the positive result of today’s market can be the reason that Narendra Modi is again expected to be sworn in on June 8 to be the Prime Minister for the third time as Janata Dal (United) (JDU) and Telugu Desam Party (TDP) came to support the Bharatiya Janata Party (BJP) led by the Modi government. As the Modi government will not have the majority, the political, economic, and social policies of the new government will play an important role even in the stock market.
Investors’ Opinion on the Indian Stock Market’s Volatility
Regarding this market volatility, the Chief Investment Strategist of Geojit Financial Services, V.K. Vijayakumar, also claimed that the stability of the market will return soon. However, the volatility will continue until there is clarity in the new government’s cabinet. In this volatile market situation, foreign investor Morgan Stanley claimed that they will focus on the second week of July, which is the earning season. They also claimed that they expect no change in the RBI policy rate that will come on June 7, but they are waiting for it. Therefore, the majority of market investors are focusing more intently on the infrastructure, railway manufacturing, electricity, and defence sectors, as they had significant sell-offs in the previous session.
