MUMBAI: Most investors in stock markets do not like uncertainty. Sunday’s state election results will help investors to clear doubts, if any, about the continuity of the BJP-led government’s policies till at least the Lok Sabha elections in May. This confidence is also expected to support the current market rally and take the sensex and Nifty to new life highs when markets open on Monday.
Market players are also betting on RBI to maintain a status quo on rates in its policy meeting between December 6-8. That should also help the rally on Dalal Street, they said.
On Friday, Nifty scaled a new life high after over two months and closed at 20,268 points while the sensex, at 67,481 points, is less than 1% away from its all-time peak of 67,927.
“A new bull phase with a clear support for growth awaits the market following a strong mandate for the ruling party at the Center in three out of five state poll results,” said Prashanth Tapse of Mehta Equities. He added, “A stable political environment could further boost investors’ confidence and drive the markets higher, with the possibility of Nifty attaining 20,500-20,800 levels.”
A host of global cues acting as tailwinds – dipping crude oil prices, sliding US government bond yields and inflation rates that are coming down fast – are expected to help the global market rally that would also help investors on Dalal Street, market players said.
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In November, foreign portfolio investors (FPIs) turned net buyers in the Indian stock market, after two consecutive months of outflows. With the Chinese economy continuing to give signals of weakness, global investors are likely to look at India more positively, institutional dealers and analysts said.
Manish Chowdhury, head of research, StoxBox, said: “As we move closer to the 2024 general elections, we believe that the decisive win by the BJP in key states has sent a strong message to investors betting on India’s rising growth potential and position the country on stronger footing as compared to its peers… We won’t be surprised to see (Nifty) closer to the 22,000 levels before the general elections.”
With December being a month when foreign fund managers mostly remain on the sidelines due to the Christmas-New Year holidays, FPI flows are expected to gain momentum in January, they said.
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“Global markets are currently in a fabulous mood. The US 10-year bond yield and the dollar index are also cooling off, which gives strength to the market,” said Pravesh Gour, senior technical analyst, Swastika Investmart.
