Markets lose steam after Modi wave propels indices to record highs

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Mumbai, May 23

The BSE Sensex surged over 1,000 points on Thursday to touch the 40,000-mark for the first time ever following the BJP's thumping electoral show, but could not sustain the euphoria as investors chose to cash in on the gains.

In similar movement, the broader NSE Nifty crossed the historic 12,000-level after early trends gave the BJP a comfortable majority in the Lok Sabha, but succumbed to profit booking towards the fag-end of the session.

The 30-share Sensex tumbled 298.82 points, or 0.76 per cent, to close at 38,811.39, while the Nifty settled 80.85 points, or 0.69 per cent, lower at 11,657.05.

Interestingly, when the Narendra Modi government came to power on May 16, 2014, the Sensex had rallied 261.14 points, or 0.90 per cent, to 24,121.74; and the Nifty jumped 79.85 points, or 1.12 per cent, to 7,203.

According to experts, the markets had already priced in the election outcome and the focus would now shift to reforms, economic growth, monsoon and developments surrounding the bruising US-China trade conflict.

"The re-election of NDA alliance has put to an end to the uncertainty and raised hopes of momentum gaining in the Indian economy and markets, which logically attained new heights today.

"The results have raised hopes of the issues being faced by the economy being tackled in a firm and prudent way. This is the first time in world history that a government that has introduced GST in a country has been voted back to power," said Dhiraj Relli, MD and CEO, HDFC Securities.

IndusInd Bank was the biggest gainer in the Sensex pack, rallying 5.23 per cent, followed by Hero MotoCorp, Coal India, Yes Bank, PowerGrid, ICICI Bank, HCL Tech, L&T, Kotak Bank and Bharti Airtel, rising up to 1.56 per cent.

On the other hand, Vedanta, ITC, Tata Motors, HDFC twins, Bajaj Finance, Sun Pharma, Tata Steel, TCS, ONGC and Infosys fell up to 5.53 per cent.

"Markets were initially enthused to see the election results falling in line with the exit polls. However, the run up to the D-day was so sharp that it turned out to be a sell on news phenomenon," said Devang Mehta, Head - Equity Advisory, Centrum Wealth Management.

Participants would now be keen to know the future course of action for bringing the economy back on track, solution to the liquidity situation, the union budget, onset and progress of monsoon in June and most importantly the earnings trajectory, he added.

Meanwhile, foreign institutional investors poured in a net Rs 1,352.20 crore into the equity markets Thursday, provisional data showed.

Sectorally, the BSE telecom, capital goods, industrials, realty and power indices ended up to 0.97 per cent higher.

However, FMCG, metal, consumer durables, finance, teck, healthcare and auto declined up to 1.82 per cent.

The broader BSE midcap and smallcap indices followed the benchmarks, shedding up to 0.15 per cent.

According to traders, weak cues from other global markets and a depreciating rupee also weighed on investor sentiment.

The rupee depreciated 37 paise to 70.04 against the US dollar in afternoon trade.

Globally, equities wobbled owing to the continuing US-China trade tensions and lacklustre PMI data in Europe.

Bourses in Asia ended in the red, while European markets were also trading on a negative note in early deals.

Brent crude, the global oil benchmark, was trading 1.79 per cent lower at USD 69.72 per barrel. PTI