While the market euphoria over the near-certainty of Modi 2.0 is driving up the benchmark indices, the government-forming period could see increased volatility. National Stock Exchange (NSE) benchmark index, the 50-share Nifty, was trading at the intraday high fo 11,744 points by 1 pm, having opened gap-up at 11,651 points. The index had closed last week at 11,407.
Bombay Stock Exchange (BSE) Sensex gained more than 1,000 points to trade above 39,050, after opening at 38,701. The index had closed last week at 37,794.
The Nifty FUT premium has gained slightly, though it is yet to return to the levels before the elections began. Nifty MAY FUT hourly candle of 12:15 hours closed at 11,748 as against 11,735 of the Nifty candle for the same period. For now, the market direction has helped smother volatility with India VIX dipping about 17 per cent by noon, touching 23 points after having opened above 28. The market could remain in consolidation in the 11,550-11,850 range until it determines the direction.
All sectoral indices have been trading in the green with Nifty PSU Bank gaining more than 7 per cent and Nifty Realty 4.4 per cent. Nifty Fin Service at 3.56 per cent increase and Nifty Bank at 3.52 per cent were also pushing up the market.
Nifty's relative strength index (RSI) at 60 showed further upward momentum. But traders will be watching Nifty's close above 11,750 in successive sessions to determine its return to the rally that was interrupted after the global and domestic factors intervened. What spooked the markets more than the fear of US-China trade war escalation was the hint in media reports that Prime Minister Narendra Modi might have to return to lead a minority government with the Bharatiya Janata Party (BJP) failing to crack the magical 272 seats in the 543-member Lok Sabha after the elections. The exit poll boost has helped the market regain what it shed since April 19 after the elections got underway.
While most shares gained with only a handful in the red, the companies though to benefit from Modi's return with a definite majority gained the most. Mukesh Ambani-led Reliance Industries (RIL), the recent crash of which forced the company to lose the honour of being the biggest in the country by market cap to Tata Consultancy Services, reversed the trend sharply and gained 4.6 per cent to hit an intraday high of 1,336 after having opened at 1,313.
Anil Ambani-led Reliance Power (RPOWER) and Reliance Capital (RELCAPITAL) gained 10 per cent and 6 per cent respectively. Even grounded airline Jet Airways bounced back more than 7 per cent for no apparent reason.