A day after the announcement of the Lok Sabha elections, domestic stock market indices Sensex and Nifty, which opened nearly 1 percent higher on Wednesday (May 5), extended gains in the morning trade.
The Sensex surged 2.46 percent, or 1,772.04 points to 73,851.09 at 11:30 am. The index had opened at 73,027.88, up 1.32 percent, compared to the previous close of 72,079.05.
The broader Nifty also jumped 2.56 percent, or 560.5 points, to an intraday high of 22,445, after a gap-up opening of 243.85 points, or 1.11 percent.
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 percent, 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, at 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 percent 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 percent and 15.04 percent, respectively on Tuesday, recovered losses and were down 0.67 percent and 0.55 percent, respectively.
The NSE firms that gained the most included Tata Consumer Products (6.30 percent), Hindustan Unilever (6.06 percent), Hero MotoCorp (6.46 percent), Mahindra & Mahindra (6.01 percent), and Asian Paints (4.71 percent).
The article originally appeared on Indian Express.