Election Week Frenzy: Bulls & Bears Battle Amid Exit Polls and Results | Weekly Update June 8th
Hello Readers!
Exit poll and election results caused quite a stir in the Indian markets this week as Indian bourses witnessed wild swings between the bull and the bear battle. From a strong start on Monday over an indication of BJP’s landslide victory to a crazy 8% fall on Tuesday when investors fretted that counting was much higher on results day – no one could have predicted the Indian markets would really test the best of investors and traders like this.
Let’s take a look at what happened in the markets this week, why it happened and the way forward now that BJP comes back for the third term!
🧾In this Article
Weekly Market Wrap-up
Quick bites
Stocks in News
Sustainability Corner
IPO corner
Cover story: Analyzing the Chaos: Indian Markets React to Exit Polls and Election Day Turmoil
Key events
📈 Weekly Market Wrap-up
The Indian equities was on a whirlwind this week. After recording their single biggest day gain in 3-years on Monday, with Nifty & Sensex gaining 3.25% and 3.39% respectively, the Indian markets witnessed their worst session in over four years on Tuesday, plunging over 8.5% during the trading session before recouping some losses. Finally Nifty ended the day with 5.93% losses and Sensex 5.74%. On Tuesday, state-run companies (NIFTYPSE) plunged 16.4% and energy stocks (NIFTYENR) sank 12.5% to record their worst day ever. Midcap and smallcap stocks were also hammered. This was the second worst election day for Sensex and Nifty since 1999.
Fun fact: Did you know, in 2004, when Congress won the elections, Nifty and Sensex took a hit on election results day, closing with 7.87% and 6.1% losses respectively.
Despite these wild swings, the Indian markets rewarded the investors over BJP-victory. Despite the Tuesday bloodbath, the SENSEX surged 3.69% during the week gaining 2,732.05 points, to end the week at remarkable 76,693.36 level. Similarly, the NIFTY witnessed substantial gains, climbing by 759.45 points to reach 23,290.15, clocking an impressive 3.37% weekly rise.
This upward movement underscores the overall positive sentiment prevailing in the market over confirmation of BJP’s third turn and the confidence of the investors in the incumbent government.
Sector Spotlight:
In terms of sector performance, BSE IT and BSEFMC stood out as top performers this week, showing impressive growth of 8.17% and 6.93% respectively. Conversely, BSE CG experienced a decline of 1.72%. However, other sectors such as BSE CD and BSE HC displayed resilience, recording gains of 4.07% and 4.05% respectively.
Top gainers
- M & M: ₹2,857.1 (+13.99%)
- United Spirits: ₹1,305.45 (+12.6%)
- Godrej Consumer: ₹1,427.9 (+12.4%)
- Tech Mahindra: ₹1,377.6 (+12.14%)
- Dabur India: ₹612 (+12.08%)
Top losers
- Adani Energy Sol: ₹1,020.05 (-9.15%)
- REC Ltd: ₹496.8 (-7.62%)
- Adani Total Gas: ₹978.4 (-5.85%)
- Adani Enterprises: ₹3,218.7 (-5.65%)
- Hindustan Aeronautics: ₹4,745.35 (-4.67%)
Did you know, with TDP’s Chandrababu Naidu set to become the new CM over his victory, his company Heritage Foods clocked an impressive 52% return during the week?
FPI and DII Activity:
Amid the market’s crash and recovery, foreign portfolio investors (FPIs) have withdrawn ₹18,109 crore so far in June. Net FPI outflows reached a record high of ₹12,436 crore on June 4, coinciding with the Lok Sabha election results and a 6 percent drop in the Sensex. In contrast, domestic institutional investors (DIIs) purchased ₹6,864 crore worth of equities in June.
Global Gossip:
This week’s market performance has been mixed. The Dow Jones (neutral) saw a modest 0.29 % change. The S&P 500 and Nasdaq both seemed to be bullish and saw gains of 1.32% and 2.38% respectively. European markets were sluggish, with the DAX seeming bearish and down by 0.32%. The FTSE too joined the bears’ club as it saw a minimal increase of -0.36%. The Nikkei 225 rose 0.51%, while the Hang Seng closed the week 1.59% higher.
Rupee Report:
The rupee closed at 83.53 against the U.S. dollar, down 0.47% on Tuesday, its worst single-day percentage fall since February last year. Additionally, the rupee depreciated slightly further to settle at 83.52 against the US dollar on Saturday due to foreign capital outflows and rising crude oil prices overseas.
Gold Surges:
On Friday, gold prices remained stable and were poised for their initial weekly rise in three weeks as investors increased their expectations of an impending rate cut by the U.S. Federal Reserve, resulting in a decline in the dollar and Treasury yields. Spot gold remained relatively unchanged at $2,293.38 per ounce as of 0321 GMT, having recorded an increase of approximately 1.5% for the week.
🍟 Quick Bites
🏆 NSE set a world record today (5 June) by processing 1,971 crore orders in a single trading day.
🏦 RBI has begun a 3-day meeting to decide the next monetary policy, with decisions to be announced on Friday.
📈 SEBI has mandated that brokers be removed as intermediaries in stock transfers, with stocks to go directly to investors’ demat accounts from clearing corporations, effective 14 October.
⛏️ India’s coal production increased by 10.15% to 839.1 lakh tonnes in May compared to 761.8 lakh tonnes in the same period last year.
📡 The spectrum auction has been postponed by 19 days and will now start on 25 June, according to the Department of Telecom.
📺 Prasar Bharati (Doordarshan) will broadcast India’s matches from the ongoing T20 World Cup, the Paris Olympics, and Wimbledon on its DD Sports channel.
🚂 Indian Railways carried 1,391.6 lakh tonnes of freight in May 2024, a 3.6% increase over May 2023.
⚓ Cargo traffic at India’s major ports rose by 3.75% year-on-year to 720.4 lakh tonnes in May, according to the Indian Ports Association.
🛣️ NHAI has reportedly increased toll charges by an average of 5%.
🌐 The US, UAE, and Netherlands were the top export destinations for India in 2023-24, according to the Commerce Ministry.
📈 The Nifty Bank index crossed 51,000 points for the first time.
✈️ India’s domestic air passenger traffic rose 5.1% year-on-year to 13.89 crore in May, according to ICRA.
⚡ The overall trade volume of the Indian Energy Exchange (IEX) increased by almost 29% year-on-year to 1,063.3 crore units in May.
💼 The number of High-Net-Worth Individuals (HNIs) in India increased by 12.2% year-on-year in 2023 to 35.89 lakh, with their wealth rising 12.4% to ₹1,17,92,960 crore.
💰 Forex reserves surged by $4.84 billion, reaching a new all-time high of $651.5 billion. In the previous week, overall reserves had fallen by $2.027 billion to $646.673 billion.
💰 Jensen Huang of Nvidia Corp. has consistently ascended the ranks of the world’s wealthiest individuals as the market value of his computer-chip company approaches $3 trillion.
Stocks in news:
💼 Tata Motors’ board has approved the establishment of a wholly owned subsidiary for its commercial vehicles business, ‘TML Commercial Vehicles,’ and the merger of Tata Motors Finance with Tata Capital.
🏦 Kotak Mahindra Bank received RBI approval to sell a 70% stake in its general insurance subsidiary to Zurich Insurance Company.
💊 Torrent Pharma signed an agreement with the Japanese pharma company Takeda to market its acid reflux drug in India.
🏗️ KEC secured orders worth ₹10,020 crore for civil and defense residential projects.
🏦 PNB signed a long-term agreement with IIFCL to fund upcoming infrastructure projects.
💳 ICICI Bank launched a co-branded VISA credit card with the Adani group.
💻 Mphasis partnered with the quantum software company Classiq to provide quantum computing solutions to other firms.
📄 L&T received an income tax department penalty of over ₹4.60 crore.
✈️ InterGlobe (IndiGo) will start 10 new destinations in FY25 and partnered with Japan Airlines for direct flights to 14 destinations in India.
🛢️ Welspun Corp’s subsidiary signed a deal worth ₹36,700 crore with Saudi Aramco to supply steel pipes.
💰 SBI’s market capitalization crossed ₹8 lakh crore on 3rd June
💼 Raymond, a company spanning textiles to engineering, is actively negotiating with landowners to secure joint development agreements (JDAs) worth Rs 5,000 crore.
💰 Shriram Finance raised ₹3,908.7 crore in multi-currency loans for business growth.
🏢 Embassy REIT raised ₹1,200 crore to acquire a business park in Chennai.
💊 Biocon received US FDA approval for its anti-fungal medicine.
💊 Lupin launched a generic drug in the US to treat bacterial infections.
🏨 ITC shareholders approved the demerger of ITC’s hotel business.
⚡Wipro secured a $500 million (approximately ₹3,750 crore) deal from a US communication service provider.
📈 ZEE’s board approved raising ₹2,000 crore by share issues.
🚗 Maruti Suzuki launched limited edition cars for its smaller hatchback models (Alto, Celerio, and S-Presso), available only in June 2024.
🛠️ NBCC received 13 different orders worth ₹49,100 crore from various government bodies.
🚂 RVNL received a ₹390 crore order from Eastern Railways to construct a bypass line.
🌱 Sustainability Corner
🏭 BHEL received orders worth over ₹35,000 crore from Adani Power to set up two thermal power plants in Chhattisgarh and from Mirzapur Thermal Energy (UP) for another thermal power project worth over ₹35,000 crore.
🏢 UltraTech conserves 105 million cubic meters of water in FY24, achieving a 5X water-positive status. Additionally, the company has established Zero Liquid Discharge (ZLD) plants at several of its manufacturing units to ensure the complete reuse of treated water within the facilities.
IPO corner
Listings:
- Aimtron Electronics made a strong stock market debut, on 6th June, opening at ₹241, nearly 50% higher than its IPO price of ₹161 on the NSE Emerge platform.
- Associated Coaters debuted its listing at ₹142 per share, marking a premium of 17.36% over the issue price of ₹121 per share in the IPO
- Kronox IPO: To be listed on 10th June 2024, has been subscribed 118.22 times, with retail subscription at 55.72 times, and is now closed for subscription.
Upcoming IPOs:
- Le Travenues Technology Ltd SME IPO 10th –12th June
- Ixigo Mainboard IPO: 10th –12th June
News:
- Bajaj Housing Finance company announced that it has received approval for its IPO plan, aiming to raise ₹4,000 crore through a fresh issue.
- It might take a few more years before the initial public offerings of Walmart’s Flipkart marketplace and PhonePe digital payments platform occur as per a Walmart executive.
Analyzing the Chaos: Indian Markets React to Exit Polls and Election Day Turmoil
As the recent Indian elections unfolded, the markets experienced significant turmoil and volatility. With exit polls predicting a potential victory for the Bharatiya Janata Party (BJP), investors scrambled to analyze the potential impact on the stock market. Under Modi’s leadership, the country’s stock markets flourished. Earlier this year, the National Stock Exchange of India (NSE) overtook the Shenzhen Stock Exchange and the Hong Kong Exchange, becoming the world’s sixth-largest bourse, according to the World Federation of Exchanges. However, Indian shares experienced their steepest decline since 2020 following the Bharatiya Janata Party’s loss of its parliamentary majority.
Let’s delve into the chaos surrounding the Indian markets during the elections, examining the reactions to exit polls and election day events, and exploring the lessons learned from this turbulent period
Market reaction to exit polls and election day events
The market reaction to exit polls and election day events in India was nothing short of intense. As investors awaited the outcome, stock prices fluctuated wildly, reflecting the uncertainty and anticipation surrounding the potential election results. The Bharatiya Janata Party’s performance in the exit polls set off a chain reaction of trading activity, with sectors such as infrastructure, banking, and consumer goods experiencing significant movement.
As election day loomed closer, the markets braced themselves for further volatility, reacting sensitively to any developments or news updates.
Impact on different sectors
The performance of the Bharatiya Janata Party in the exit polls and election day activities had a distinct impact on various sectors within the Indian market. Industries such as infrastructure witnessed a surge in stock prices, fueled by optimism surrounding potential government policies and projects under a BJP-led administration. On the other hand, sectors like banking and consumer goods experienced fluctuations as uncertainties loomed over the market.
Understanding how each sector responds to political events is crucial for you to make informed decisions during volatile times. So, let’s take a deeper look into the specific reactions of different sectors and analyze the strategies that can be employed to navigate through these turbulent market conditions.
Investor sentiment and market volatility
Investor sentiment and market volatility play a pivotal role in shaping the trajectory of Indian markets amidst political upheavals. Sentiments often sway in response to political events, driving market volatility to unprecedented levels. As an investor, you must remain vigilant and adopt a cautious approach when navigating through turbulent times. Diversifying portfolios, conducting thorough research, and staying informed about sector-specific responses can help mitigate risks and capitalize on opportunities that emerge in the wake of political uncertainties. Next, let’s explore how investor sentiment influences market dynamics and strategies to weather the storm of fluctuating market conditions.
Strategic analysis and predictions for the future
Strategic analysis and predictions for the future are essential components for investors to navigate the unpredictable terrain of Indian markets, especially following exit polls and election day turmoil. Understanding market dynamics, political impacts, and economic trends will be crucial in making informed investment decisions. Evaluating company fundamentals, monitoring global market developments, and staying abreast of regulatory changes can provide valuable insights for strategic planning. By incorporating these factors into investment strategies and maintaining a long-term perspective, investors can position themselves to capitalize on market opportunities and mitigate risks in the face of uncertainty.
Political implications on market stability
The political landscape plays a pivotal role in shaping market stability in India. As election outcomes unfold, market reactions can vary significantly based on the perceived impact of new policies, regulations, and government decisions. Understanding the potential implications of political developments on various sectors and industries is crucial for you if you’re seeking to anticipate market trends. Keeping a close eye on government announcements, policy shifts, and political sentiment can provide valuable insights into the direction of the market.
The final takeaway
Elections are an exciting, albeit sometimes nerve-wracking, time. Remember, the market has weathered numerous elections before, and it’s likely to weather this one too. The recent chaos in Indian markets following exit polls and election day turmoil underscores the delicate balance between politics and market stability. As you navigate this uncertain terrain, it is imperative to stay informed about political developments and their potential impact on various sectors. To mitigate risks and capitalize on opportunities, consider diversifying your investment portfolio across different industries and asset classes.
Additionally, staying updated on government policies, regulatory changes, and political sentiment can provide a strategic advantage in navigating market fluctuations. If you’re feeling overwhelmed, consider consulting a financial advisor who can help you navigate the market during election season. Need an advisor? Reach out to us to get financial advice from award-winning analysts at Arihant Capital Markets Ltd.
Upcoming key financial events for the week:
| Date | Event |
| 09-Jun-24 | EUR European Parliamentary Elections |
| 11-Jun-24 | GBP Claimant Count Change |
| 12-Jun-24 | GBP GDP m/m |
| USD Core CPI m/m | |
| USD CPI y/y | |
| USD Federal Funds Rate | |
| INR CPI (YoY) (May) | |
| 13-Jun-24 | USD FOMC Press Conference |
| AUD Employment Change | |
| AUD Unemployment Rate | |
| USD Core PPI m/m | |
| USD Unemployment Claims | |
| 14-Jun-24 | USD Prelim UoM Consumer Sentiment |
| INR WPI Inflation (YoY) (May) |
