 "Sensex reclaims 80k mark; Maha poll results, MSCI buying underscore gains")
Benchmark indices rallied for a second consecutive day as investors welcomed Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) strong showing in Maharashtra elections. Also, passive buying from foreign portfolio investors (FPIs) due to Morgan Stanley Capital International (MSCI) rebalancing further supported the gains.
The S&P BSE Sensex closed at 80,110, up 993 points or 1.3 per cent. The National Stock Exchange Nifty ended the session at 24,222, a gain of 315 points or 1.3 per cent. The Sensex reclaimed the 80,000 mark after 11 sessions. In the last two sessions, the Sensex rose by 3.8 per cent and the Nifty by 3.7 per cent.
FPIs purchased shares worth Rs 9,948 crore, the highest since September 20. They have been net sellers daily since September 27, when the indices hit new highs. Meanwhile, domestic institutional investors sold shares worth Rs 6,907 crore, their largest single-day selling ever.
Experts observed that the institutional flows on Monday were largely a one-off event driven by MSCI buying and selling, rather than a change in market trend.
HDFC Bank, the largest weight on the index, gained 2.2 per cent and was the biggest contributor to both the Sensex and Nifty’s gains. Shares of Reliance Industries also rose by over 2 per cent following an upgrade by Citibank.
HDFC Bank was expected to see buying of around Rs 15,000 crore due to MSCI increasing its weight in its widely followed indices.
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“The FPI buying is primarily due to the MSCI rebalancing, with extra momentum driven by the election results. Markets are lapping up whatever good news is coming their way,” said Andrew Holland, chief executive officer of Avendus Capital Public Markets Alternate Strategies.
Adani group stocks ended mixed, with five gaining and five declining. Among them, ACC rose the most, closing 2.5 per cent higher, while Adani Green Energy Solutions declined the most, falling by 8.1 per cent.
Infrastructure and real estate stocks also rallied on hopes that the BJP’s decisive victory will boost capital expenditure (capex) spending.
“The rally was broad-based, with capex-linked sectors such as infrastructure, capital goods, and industrials outperforming in anticipation of a surge in new order inflows. The outlook for the second half remains positive due to a strong monsoon, festival, and wedding season, which could ease the impact of earnings downgrades seen in the second quarter,” said Vinod Nair, head of research at Geojit Financial Services.
The BJP-led National Democratic Alliance secured 230 of the 288 seats in the recently concluded Maharashtra elections. The state had seen political instability after a fractured mandate in the last Assembly election.
Equities also received a boost amid hopes that Donald Trump’s choice of Scott Bessent for US treasury secretary would soften the implementation of sweeping tariffs and tax cuts. Bessent’s nomination revealed some challenges for emerging markets, including a surging dollar, reduced expectations for tax cuts, and an increase in tariffs, according to experts.
The 10-year yield fell to 4.36 per cent from 4.4 per cent in the previous session. The dollar index dropped by 0.4 per cent, trading at 1,287. Brent crude declined by 1.1 per cent, trading at $74.5 per barrel.
Oil prices fell as treasury secretary nominee Bessent advocated for increased US production, while Israel suggested a ceasefire deal with Lebanon’s Hezbollah could be days away. Moving forward, the Federal Reserve minutes and US macroeconomic data will offer cues to investors.