By Linus Garg
First publised on 2023-12-05 15:58:30
After the impressive performance by the BJP in the three Hindi heartland states of Rajasthan, Madhya Pradesh and Chhattisgarh, the stock markets in India are on fire. In just two trading sessions on Monday and Tuesday after the results were announced on Sunday evening, the Sensex has jumped by over 1800 points and the Nifty by 587 points. Scaling new closing highs, the Sensex closed at 69296 and Nifty at 20855 on Tuesday. Investors see in these BJP wins a confirmation that the party is most likely to return to power in 2024 with a substantial majority which will result in continuance of policy and long-term growth, both things necessary for rise in investor wealth.
The markets were rising since the beginning of November due to a host of factors. The Indian economy was proving to be resilient in the face of global slowdown and recorded a better-than-expected growth in the second quarter of FY24 buoying investor sentiment. With the release of hostages in batches, the war clouds in the Middle-East were also receding, reducing the possibility of disruption in supply chains. After a huge scare, oil prices had also shown a declining trend and have gone down by 7% from the beginning of November. Investors also expect the US Fed to cut rates earlier than expected and the US bond yields were easing. Finally, net FPI inflows in the first few days of December have already crossed the amount invested in the whole month of November.
Since the sentiment was positive in the market, the BJP wins gave it the impetus needed for a bull run. The Adani group shares have also contributed in the big jump after the US government termed the allegations against the group made by Hindenburg as 'not relevant', at least for Adani Ports, after a due diligence conducted by the International Development Finance Corporation. The US government approved a $553mn extension to the group for its container terminal in Sri Lanka. The shares of all Adani companies have surged by more than 10% and the increase in market capitalization has once again propelled Gautam Adani in the top 20 of the wealthiest persons in the world list.