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Markets close in red on result day; 1st time in years

Last Updated 23 May 2019, 12:25 IST

Indian markets closed in the red on an election results day, a first in many years, on Thursday, after BSE Sensex and NSE Nifty touched historic 40,000 and 12,000 levels respectively during the intra-day trade, as the markets cheered the return of Narendra Modi-led National Democratic Alliance government.

The markets opened over 1% higher as the early leads suggested huge victory for the Modi –led government. The markets continued to witness heavy buying and Sensex breached the historic 40,000 mark at 10:30 am in the morning.

During the day’s trade, Sensex touched the intra-day high of 40,124.96 points.

However, after testing the historic value, the markets witnessed heavy sell off, on the back of profit-booking amid skyrocketing valuations. In the afternoon trade, markets witnessed a decline of 46 points as well. At the end of the trading, the Sensex closed at 38,811.39 points, down 298 points. Markets turned volatile during the day – oscillating in the range of 3.4%.

The volatility in the markets can be gauged from the fact that overall market breadth changed from heavily positive to the negative in the afternoon. In the morning trade, BSE witnessed 1,466 advances, against 589 declines, while in the afternoon, advances stood at 1,317 and declines at 1,202.

“Markets have already priced in the development. So, after the election euphoria died down, it will be more macro factors like oil, rupee, inflation, interest rates, and earnings growth that will determine investment and portfolio performance,” said Anubhav Shrivastava of Infinity Alternatives.

Analysts attributed the phenomenon to global cues as well. “The initial reaction was on sentiments, the latter was on fundamentals. The FII flow didn’t come as the global markets are in the red,” Rahul Shah of Motilal Oswal said.

However, the experts expect policy stability as the country has given a decisive mandate to PM Modi.

“Stability of the government reflects positively on the underlying economy and the same gets reflected on the stock markets,” said Pankaj Razdan, CEO and MD of Aditya Birla Sun Life.

Similarly, the broader index, 50-share NSE Nifty tested the historic 12,000 level for the first time in history and touched an intra-day high of 12,041.15 points. However, in the afternoon, the Nifty closed trading at 11,679.30, down 81 points.

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(Published 23 May 2019, 10:20 IST)

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