Sugar-rush on Dalal street, Sensex notches up biggest intraday gain in a decade

Last Updated: Mon, May 20, 2019 17:10 hrs
Bull Sculpture (Image Courtesy: Bloomberg)

Mumbai: Indian domestic indices woke up to a bull-run of sorts never witnessed in as long as a decade.

On Monday, most domestic indices sizzled in a range of 3-4 percent. The Sensex recorded a gain of 1421.90 or 3.75 percent to close at 39,352.67. The NSE Nifty was up by 421.10 points or 3.69% at 11,828.25.

Markets behaved in a frenzy seen not too often. And, this enthusiasm has been attributed to the exit polls. With surveys painting a vivid picture of the probability of the incumbent government resuming power in its second innings, the markets rallied. In fact, a majority of the exit polls have shown the National Democratic Alliance winning by a good margin. Such exit polls have convinced markets that results on May 23rd will favour the Narendra Modi led government.

Most exit polls forecast another term for Modi, while others projected that the BJP-led NDA would get over 300 seats to comfortably cross the majority mark of 272 in the Lok Sabha.

Sensing a landslide victory, traders have started placing their optimism and purchased stocks in a record quantity.

Here are some salient features from the trading session on Monday:

Baring Infosys and Bajaj Auto (down by 1.18%) all scrips on the thirty scrip sensitive BSE Sensex recorded a gain.

Indusind Bank, State Bank of INdia, Tata Motors, Yes Bank, Larsen Toubro, HDFC, made over a 6 percent intra-day gain.

Yes Bank with a trading volume of 61 lakh shares was the most traded. Reliance Industries scrips offered the biggest turnover making a total of Rs 28,099 lakhs.

On the BSE, most broad-based indices, including small cap, mid-cap and large cap posted an average of 3.5% intraday gain.

Banking scrips made the most of the gains among sectoral indices. Scrips of Kotak Mahindra Bank, ICICI Bank, and HDFC Bank surged over 7% in intra-day to set record highs.

Nifty Bank Index posted the highest gains by scoring a 4.63% gain in intra-day trading. The Nifty Bank index set a high of 30,815 in the session.

Sectoral indices such as Industrials, Capital Goods, Realty, Finance, Energy, Bankex and even Auto posted over 4% intra-day gains.

BSE Teck and BSE Information Technology seemed to trade with caution with an average intra-day gain of 0.5%. Healthcare scrips were up in a range of 1%. The impact of the trade-war between US and China seemed to affect tech and pharma stocks. At the start of the day, Rupee rose by 79 paise at rs 69.44 against the Dollar.

Overall session saw a total turnover of Rs 2,441 crores on the BSE.

Of the total of 2813 stocks traded, 2019 advanced, 609 declined, while 185 remained unchanged. 66 scrips set a 52 week high as opposed to 151 that set a 52 week low.

The enthusiasm on Dalal Street was in stark contrast to market behaviour in other geographies. Most Asian indices on Monday reported a fall. The Shanghai SE Composite Index, Nikkei 500, Hang Seng Index were down by a margin of 0.5%. Others such as Nikkei 225, Taiwan TSEC 50 index were up marginally.

The US-China trade war narrative and subsequent tariff-impositions reportedly depleted equities off their valuations. Surprisingly, the trade-war narrative did not affect domestic investors on Monday. In fact none of the weaker overseas cues intruded the Sensex or Nifty's majestic gain.

Here's what brokerages have to say:

Pradeep Gupta, Co-Founder and Vice-Chairman, Anand Rathi:
"After a few volatile sessions, the markets today opened with a 2% gain on both the indices with exit polls stating a comfortable victory to the NDA. The expected stability and continuity in policy, increase in FII inflow are keeping the markets positive. We are likely to see a revival in the corporate performance from the 2nd quarter in this financial year. If these results hold true on May23rd, it will be good for the economy, though short term the markets may be driven by sentiments."

Dhiraj Relli, MD & CEO, HDFC Securities:
Indian markets expectedly cheered the outcome of the Exit polls and Nifty registered its largest point gain since Jan 25, 2009. Nifty is just shy of all time high of 11856 but has nevertheless closed at its all time closing high. Markets seem to have almost fully discounted the outcome of final election results. Institutional buying was seen on Monday (reflected in large cash market volumes of Rs.44,000 cr+) which triggered some amount of short covering. Over the next three days Markets could look up to corporate results and / or global developments. For a large change in inflows, key cabinet berth allocation and initial policy announcements will be keenly awaited. In the meanwhile one hopes globally risk-on trade continues.

Dr. Joseph Thomas, Head Research- Emkay Wealth:
“The domestic equity markets witnessed unprecedented and remarkable surge, across all sectors and segments, after the exit polls indicated a higher probability for the current dispensation to come back to power with a clear majority. What would help the markets sustain the momentum is factors that are fundamentally important, like decisive policy initiatives from the new government, faster land and labour reforms, and also the unfinished task of quick consolidation and re-organization of the banking system. It is pertinent to note that global factors would also come to play sooner than later, the factors which cannot be overlooked are the impact of the trade and tariff war between the US and China, the developments in the Gulf Region and the prospects of a gradual slowdown in the global economy.”

Rusmik Oza, Head of Fundamental Research, Kotak Securities:
"As expected Indian markets reacted very positively today with broader indices showing better strength than the Nifty-50. Mid Cap Index rose by more than 4% today indicating smart pull back in most the beaten down names. If Nifty crosses the previous peak of 11,856 then we can expect it to rise further an test the 12,000 mark before 23rd May. For Nifty to cross 12,000 a strong single party majority for the BJP is required. Going forward if we have the BJP-led coalition coming back to power on 23rd then expect broader participation in the mid & small cap space as they are the most beaten down in the last 18 months."

Other brokerages believe that the enthusiasm may sustain itself until May 23rd when the election results are announced. The Sensex and Nifty, until then are poised to set a massive record.

Disclaimer:This article is informative in nature. Readers are advised to consult their financial advisors before placing any order in the stock markets.