A day after experiencing their steepest percentage losses in nearly four years, the Indian stock market benchmarks, Sensex and Nifty 50, staged a remarkable comeback on Wednesday, June 5. Investors, digesting the Lok Sabha election results, shifted their focus back to fundamentals and developments surrounding government formation.
The Sensex surged by 2,303 points, or 3.20 percent, to reach 74,382.24, while the Nifty 50 soared 736 points, or 3.36 percent, to 22,620.35.
Strong gains were observed across sectors in the Indian stock market following indications that the BJP-led NDA would form the government at the Centre. Comments from top brokerage firms suggesting that the election result was a short-term trigger for the market, with no material impact on long-term growth prospects, also seemed to buoy market sentiment.
The previous session's steep market decline provided investors with an opportunity to buy stocks at relatively lower prices. The medium- to long-term outlook of the Indian stock market remains attractive due to robust macroeconomic fundamentals, the growing strength of domestic investors, and expectations of rate cuts in the near future.
Not only did large-cap stocks see strong gains, but the mid and small-cap indices also performed well. The BSE Midcap index jumped by 4.41 percent, while the Smallcap index rose by 2.93 percent.
The overall market capitalization of companies listed on the BSE increased to nearly ₹408 lakh crore from approximately ₹395 lakh crore in the previous session, making investors richer by about ₹13 lakh crore in a single day.
Nearly 120 stocks, including Mahindra and Mahindra, Bajaj Auto, Hero MotoCorp, TVS Motor Company, Britannia, Dabur, Colgate-Palmolive, Godrej Consumer, and Marico, hit their new 52-week highs during intraday trading on the BSE.
The market's focus will now shift to the outcome of the monetary policy meeting, which is currently underway. The RBI Monetary Policy Committee began its three-day meeting on Wednesday, June 5, with the decision expected on Friday, June 7.
Experts anticipate that the central bank will maintain the status quo on the repo rate and policy stance.
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