Sensex and Nifty Fully Recover from Bloodshed Fall on 4th, Investors Gain Confidence with Anticipation of New Government
The Indian stock market witnessed a dramatic recovery on June 5, 2024, as the Sensex and Nifty indices surged higher following the previous day’s sharp decline. The benchmark indices, which had plummeted by 6% on June 4, rebounded significantly, with the Sensex rising 2,303 points and the Nifty gaining 736 points. This recovery was largely attributed to the anticipation of a stable government formation, with the Bharatiya Janata Party (BJP) securing a comfortable majority in the Lok Sabha elections.
Sensex Reaction to Election Results
The election results, which were announced on June 4, led to a significant sell-off in the markets. The Sensex plummeted by 4,389 points to 72,079, and the Nifty dropped 1,379 points to 21,884. However, the subsequent session saw a dramatic reversal, with investor wealth surging by Rs 13.14 lakh crore to Rs 407.97 lakh crore on the Bombay Stock Exchange.
Sectoral Performance
The recovery was broad-based, with various sectors contributing to the gains. The FMCG sector led the advance, with stocks such as HUL, Marico, and Dabur India surging due to their positive performance. The IT sector also saw significant gains, with stocks like HCL Tech and ITC rising. The Auto, Pharma, and Healthcare sectors opened with gains of over 1% each.
Market Outlook
Market analysts are optimistic about the prospects of the Indian stock market, citing the potential for policy continuity and stability. Gaurang Shah, Senior Vice President at Geojit Financial Services, noted that the markets are likely to remain volatile until there is clarity regarding the government’s formation, but the sell-off and subsequent recovery could lead to some buying at lower levels.
Pradeep Gupta, Co-founder and Vice-chairman of Anand Rathi Group, emphasized that the Indian stock market experienced substantial growth in the months following the election results in both 2014 and 2019. He advised traders to remain steadfast against political changes to navigate the market volatility.
India VIX and Market Volatility
The India VIX index, which measures market volatility, plummeted by 29.42% to 18.88, signalling a decrease in market uncertainty. This decline in volatility indicates that investors are becoming more confident in the market’s direction, which could lead to further gains in the coming sessions.
Sensex
Conclusion
The recovery of the Sensex and Nifty indices on June 5, 2024, was a significant development in the Indian stock market. The anticipation of a stable government formation and the subsequent rebound in investor confidence led to a sharp increase in market values. As the market continues to digest the election results and the formation of the new government, investors are likely to remain cautious but optimistic about the long-term prospects of the Indian stock market.
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