Sensex inches 2.46% higher, Nifty gains 560 points in morning trade

A day after the announcement of the Lok Sabha elections, domestic stock market indices Sensex and Nifty, which opened nearly 1 per cent higher on Wednesday (May 5), extended gains in the morning trade.

The Sensex surged 2.46 per cent, or 1,772.04 points to 73,851.09 at 11:30 am. The index had opened at 73,027.88, up 1.32 per cent, compared to the previous close of 72,079.05.

The broader Nifty also jumped 2.56 per cent, or 560.5 points, to an intraday high of 22,445, after a gap up opening of 243.85 points, or 1.11 per cent.

On Wednesday, Sensex suffered a loss of 4,389.73 points, or 5.74 points to end at 72,079.05, and the Nifty 50 tanked 1,379.4 points, or 5.93 per cent, to close at 21,884.5 as the Bharatiya Janata Party (BJP) failed to secure a majority in the general elections. The party secured only 240 seats, much lower than the market’s expectation.

“The market will take some time to absorb the unexpected election results. Stability will return to the market soon but volatility will continue till there is clarity on the cabinet and the key portfolios. A sharp rebound in the market is unlikely in the near term but sectoral preferences might change,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

The volatility in the market was high, with the Sensex swinging 1,971 points and Nifty 653 points. India VIX, the volatility index, which zoomed 51 per cent to 31.71 during intraday trades on Tuesday before closing at 26.75, further eased to 19.45, indicating less volatility in the near term.

“The National Democratic Alliance (NDA) will form the Modi 3.0 government with coalition partners. With this, the market will likely gain confidence in the political stability as well as the policy stability. Some positive recovery is hence expected going forward,” Axis Securities said in a report.

Nifty PSE and Nifty CPSE, which declined 16.38 per cent and 15.04 per cent, respectively on Tuesday, recovered losses and were down 0.67 per cent and 0.55 per cent, respectively.

The NSE firms that gained the most included Tata Consumer Products (6.30 per cent), Hindustan Unilever (6.06 per cent), Hero Motocorp (6.46 per cent), Mahindra & Mahindra (6.01 per cent) and Asian Paints (4.71 per cent).