Investors bet on Indian stocks in anticipation of PM Modi's return to power, index hits new high

At the time of filing this report, at 9.19 am, the Sensex was up 0.2 percent at 75,585 points, after touching an all-time high of 75,679 points soon after the opening bell.

Similarly, Nifty also remained at its all-time high around 23,000 points.

Ajit Mishra, Senior Vice President (Research), Religare Broking Ltd, in a weekly note expects the Nifty to move towards the range of 23,150-23,400 soon.

“Though all the key sectors are contributing to the rally, banking and IT still have significant growth potential, and their participation could push the index higher,” Mishra said.

He recommends continuing with a stock-specific trading approach, while preferring large-cap and mega-cap stocks for short-term trading.

Last week, Indian stock indices rallied sharply, defying the recent correction in global markets. Reacting to Prime Minister Narendra Modi's claim that the BJP-led coalition is on track to form a record third term, Indian stock indices – Sensex and Nifty – continued their upward trend and hit new highs on Thursday. Besides, the Rs 2.1 lakh crore dividend paid by the RBI to the government also played a part in the rally.

Now that six phases of the election have passed, investors are hopeful that the Narendra Modi-led government will return to power for its third term with a comfortable margin. This is also likely to spur fresh buying of shares.

On a cumulative basis, the Sensex has gained nearly 3,600 points in the last two weeks.

Foreign investors have been net sellers in Indian equities for the past several sessions. Interestingly, domestic institutional investors remained net buyers during the same period, offsetting the withdrawals by foreign investors.

By creating an unprecedented wealth of US$ 1 trillion in just 6 months, Indian stock market indices, both BSE and NSE, have joined the exclusive club of US$ 5 trillion, defying the withdrawal of FIIs (Foreign Institutional Investors) ahead of the Lok Sabha election results on June 4.

“Overall, we expect the markets to recover gradually and see some volatility next week as both elections and earnings season come to an end,” said Siddhartha Khemka, Head of Retail Research, Motilal Oswal Financial Services Ltd.

The market will now keep an eye on the exit poll estimates and fourth quarter gross domestic product (GDP) data coming later this week.

India's GDP grew by a massive 8.4 per cent during the October-December quarter of FY 2023-24 and the country remains the fastest growing major economy and is set to maintain its growth momentum going forward.