The Indian stock markets witnessed a sharp recovery in early trade today, with both the key indices Sensex and Nifty surging over 2% each. The 30-share BSE Sensex jumped 2.46% or 1,772 points to reach 73,851 levels. Similarly, the broader 50-stock NSE Nifty rose 2.56% or 560 points to trade at 22,445.
Yesterday, both indices had witnessed a steep fall of around 6% each due to the unexpected outcome of the Lok Sabha elections, where no single party secured a clear majority. However, today investors seem to have regained confidence as the formation of a new government led by Prime Minister Narendra Modi and his NDA alliance looks imminent.
Sectors across the board participated in the rally, with banking, financials, autos and FMCG stocks leading the charge. Stocks like Tata Consumer Products, Hindustan Unilever, Hero MotoCorp and Asian Paints gained between 4-6% each. Meanwhile, the India VIX volatility index declined further easing investor concerns.
Market participants will now closely watch the cabinet formation process and key economic policies of the new government. While volatility may remain in the near term, analysts feel stability will be restored once the overall political picture becomes clear. A steady recovery from here on looks likely as the markets have factored in continuation of the pro-business BJP regime at the Center.
