 "India VIX eases 22% on June 3 as exit polls 2024 show 3rd term for PM Modi")
India VIX falls on Monday, June 03, 2024: Indian stock market's fear gauge -- India VIX -- cooled off 22 per cent in morning deals on Monday, June 3, as investors shrugged off Lok Sabha election-related jitters.
India VIX, or India Volatility index, fell 22.2 per cent to 19.21 levels in early deals, down from Friday's close of 24.6 level, after exit polls predicted a landslide victory for the Narendra Modi-led Bharatiya Janata Party (BJP) and the National Democratic Alliance (NDA) government in 2024 Lok Sabha elections.
On the bourses, the BSE Sensex surged over 2,600 points to hit a record high of 76,739, while the Nifty50 touched a lifetime peak of 23,339. TRACK LIVE MARKET UPDATES
Why did India VIX drop over 20% on Monday, June 3?
The decline in Indian markets' volatility index came after exit polls, which came in the evening on June 1, 2024, gave a clear majority to the BJP-led NDA alliance with an average seat projection of 370 seats vs 353 in 2019.
For the BJP standalone, this would translate into 320-330 seats, with Axis My India (AMI) giving 331 (at midpoint of range). AMI expects nearly 400 seats for NDA.
As per AMI, vote share of the BJP is also expected to go up ~300bps from less than 37 per cent to nearly 40 per cent, with NDA at 47 per cent.
How did India VIX behave before Exit Polls?
India VIX had been on an uptrend ever since the 2024 Lok Sabha elections started in India.
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From a 52-week low of 8.4, India VIX has soared 191 per cent to over 24 levels last week. In one month, it has sprinted over 100 per cent.
The rising VIX had made it difficult for the stock markets to sustain at record high levels.
What does BJP's win mean for stock markets?
According to analysts at Kotak Institutional Equities, the 'new' government will continue with its economic agenda of development, growth and liberalisation, and focus on investment-led growth, with the recent large transfer of the RBI surplus enabling it to increase capex versus the interim budget.
"We believe that the government will continue its focus on key areas such as affordable healthcare and housing, energy transition, infrastructure development (defense, railways and roads), and manufacturing," they said.
Markets, according to analysts at IIFL Securities, are expected to see continuity as the exit polls don't seem to point to a very high increase or decrease in seats compared to 2019 result and compared to expectations (opinion polls).
"There could be attempts at accelerated reforms in key areas like electricity and agriculture. Within our top picks, we continue to favour India stories and we are positive on sectors like infrastructure, cement, private banks, NBFC's, select industrials; negative on IT and chemicals, and neutral on most consumer sectors," they said in a report.