Markets Rebound After BJPs Election Debacle

Kiran Dhavale

Expecting that the ruling BJP will be humbled in the five state elections, which will then prod the BJP government to unleash a series of populist measures in a run-up to the 2019 general elections and thereby boost the rural economy, the Indian equity market witnessed boardbased buying.

Indian stock markets regained momentum after the erratic mood swings during the state elections results. The BSE Sensex was up by 0.38 per cent, while NSE Nifty 50 was up 0.17 per cent during the fortnight. The fall in the crude oil prices and an improvement in the Indian rupee’s standing against dollar helped the equity markets display an uptick when the global markets, especially, the US market, witnessed a major sell-off and was down more than 8 per cent during the fortnight. 




Expecting that the ruling BJP will be humbled in the five state elections, which will then prod the BJP government to unleash a series of populist measures in a run-up to the 2019 general elections and thereby boost the rural economy, the Indian equity market witnessed boardbased buying. The broader indices BSE Mid-cap and Small-cap were up 0.86 and 0.18 per cent, respectively, during the I ndian stock markets regained momentum after the erratic mood swings during the state elections results. The BSE Sensex was up by 0.38 per cent, while NSE Nifty 50 was up 0.17 per cent during the fortnight. The fall in the crude oil prices and an improvement in the Indian rupee’s standing against dollar helped the equity markets display an uptick when the global markets, especially, the US market, witnessed a major sell-off and was down more than 8 per cent during the fortnight. Expecting that the ruling BJP will be humbled in the five state elections, which will then prod the BJP government to unleash a series of populist measures in a run-up to the 2019 general elections and thereby boost the rural economy, the Indian equity market witnessed boardbased buying. The broader indices BSE Mid-cap and Small-cap were up 0.86 and 0.18 per cent, respectively, during the fortnight. Auto and FMCG sectors, which depend heavily on the rural economy, were buzzing, with the BSE FMCG and Auto index moving up by 2.07 and 1.21 per cent, respectively, followed by Bankex up by 0.91 per cent. However, the export-oriented sectors Metals and IT were trailing and were down by 2.04 and 0.12 per cent, respectively. 

With the arrival of the Christmas season, the western markets seem to be indulging in a bout of profit-booking, while the Asian markets showed concerns about an imminent slowdown in the Chinese economy. The US-based Nasdaq index plunged the most this fortnight, going down by 9.24 per cent, followed by S&P 500 and Dow Jones Industrial, which were down by 8.76 and 8.65 per cent, respectively. Among the European markets, DAX lost the most, sliding by 6.05, followed by the CAC40 and FTSE100 which were down by 5.03 and 4.09 per cent, respectively. On the Asian front, Nikkei lost the most as it was down by 4.73 per cent, followed by Hang Seng and Shanghai Composite index, which lost 4.02 and 2.14 per cent, respectively, during the fortnight. 

The price of precious metal gold hit a five-month high as uncertainty loomed over the US interest rate hikes and trade tariffs and an expected slowdown in the global economy. In the international market, spot gold was at US$1,250.20 per ounce, up by 0.1 per cent, while in the domestic market, the price of gold was at Rs 32,060 per 10 gram. 

Both FIIs and DIIs were net buyers this fortnight, albeit with lower volumes. The trading data showed that FIIs were net buyers to the tune of Rs 2,962.7 crore, while the DIIs were net buyers with an inflow of Rs 533.31 crore. 

With the RBI infusing capital to ease liquidity crunch and the large-cap and mid-cap stocks regaining momentum, the end of 2018 is expected to be action-packed. Going ahead, the market is expected to remain buoyant, helped partly by the lower crude oil prices. With Russia and the US continuing to increase oil production, crude oil supply is expected to remain high, thereby keeping a tab on the oil prices in the near term

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