Monday witnessed a staggering surge in the Indian stock market, with PSU (Public Sector Undertaking) stocks leading the charge, propelling the BSE Sensex to an astounding 928-point climb to reach a fresh pinnacle at 68,409 points, marking a new high.
The BJP's victorious stance in the state Assembly polls across Madhya Pradesh, Rajasthan, and Chhattisgarh triggered a monumental rally, with PSU stocks emerging as the most significant gainers. Notable surges were observed in HPCL, NLC, BEL, GAIL, New India Assurance, IOC, RVNL, IRCON, Central Bank of India, REC, Engineers India, OIL, BPCL, Union Bank, ONGC, NBCC, and LIC, all showcasing substantial gains ranging from 4 to 8 percent.
Adani Group stocks, including Adani Enterprises, Adani Ports, and Adani Green, also saw a surge, reflecting a positive market sentiment.
Within the Sensex stocks, L&T observed a 4 percent increase, while SBI demonstrated a 3 percent uptick.
V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, emphasized the significance of the state election results as a major event igniting renewed market optimism and a potential continuation of the market rally. He highlighted the market's penchant for political stability and a government inclined towards market-friendly reforms. Vijayakumar predicted a sustained rally across various sectors in the market.
While the current market exuberance may drive a continued upward trajectory, Vijayakumar cautioned about stretched valuations, which might eventually lead to some corrective selling, emphasizing the inevitable impact of high valuations in the near future.
Kotak Institutional Equities echoed this sentiment, citing the BJP's substantial triumph in the state elections as a catalyst bolstering the market's bullish sentiment. The reduced election risk coupled with growing expectations of an imminent rate cut cycle in the US could sustain the Indian market's lofty valuations.
However, the report also noted that while most sectors trade at high valuations, financials continue to remain reasonably priced. Mega-cap stocks, which previously underperformed, might garner increased attention due to their reasonable valuations and reduced concerns about an inconclusive outcome in the upcoming general elections, specifically drawing interest from FPIs (Foreign Portfolio Investors).
(With Agency Inputs)
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