In a remarkable display of resilience, the Indian markets shrugged off any lingering concerns stemming from the Karnataka state elections and surged to nearly five-month highs on Monday. The benchmark indices closed with substantial gains, propelled by uninterrupted foreign fund inflows that overshadowed worries about weak quarterly earnings and the impact of El Nino on the monsoon season.
The BSE Sensex, India’s primary stock index, soared by 317.81 points or 0.51 percent to settle at 62,345.71, marking its highest closing level since December 14. Similarly, the broader NSE Nifty climbed 84.05 points or 0.46 percent, closing at 18,398.85 points. The bond markets also witnessed a significant development as yields on the 10-year benchmark security concluded at 7 percent after reaching a 13-month low of 6.97 percent during intra-day trades. Last Friday, the yield stood just below the 7 percent mark at 6.99 percent. This decline in yields, or the rally in Government-Securities (G-Sec) prices, was primarily attributed to lower retail inflation figures in April.
Remarkably, the market’s positive trajectory was maintained despite the Bharatiya Janata Party (BJP) suffering a significant setback in the Karnataka state elections, with the Congress party securing a resounding majority. However, market participants largely disregarded the election outcome, as several brokerages opined that the BJP is unlikely to face defeat in the upcoming 2024 general elections.
Foreign portfolio inflows played a pivotal role in bolstering stock prices. Foreign Portfolio Investors (FPIs), who have remained in a buying spree since March, purchased equities worth Rs 1,685 crore on Monday, according to provisional data. Additionally, the market sentiment received a significant boost from the decline in retail inflation, which reached an 18-month low of 4.7 percent.
Overall, Monday’s robust performance reflects the market’s ability to overcome political setbacks and concerns surrounding economic indicators. With foreign inflows sustaining their positive trajectory and retail inflation easing, investors remain optimistic about the future prospects of the Indian markets.