NEW DELHI, June 10: Indian stock indices continued their upward momentum, opening at fresh record highs on Monday following the swearing-in of Prime Minister Narendra Modi and his Union Council of Ministers. The smooth transition in government formation appears to have bolstered market sentiment.
At the time of reporting, the Sensex was at 76,890.34, up 0.3%, and the Nifty was at 23,372, up 0.4%. Both indices reached new peaks at the opening, with the Sensex hitting 76,960.96 and the Nifty touching 23,411.90. Most sectoral indices were in the green.
As the week progresses, analysts suggest that investors will monitor the upcoming US Federal Reserve interest rate decision, India’s inflation data (both retail and wholesale), and the new government’s policy decisions. The allocation of ministry portfolios to the newly sworn-in ministers will also be closely watched by the markets. India’s retail inflation eased to 4.83% in April, down from 4.85% in March, although consumer food price inflation rose to 8.70% from 8.52%.
“Global cues, particularly the upcoming US Fed meeting, will be closely watched by participants. The recovery following the post-election decline suggests resilience among participants, and we expect the prevailing tone to continue,” said Ajit Mishra, SVP, Research, Religare Broking Ltd. “The renewed participation of sectors like IT and FMCG, which were previously on the sidelines, supports our confidence. However, traders should remain cautious and focus on stocks that are moving in line with the benchmark.”
Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services Ltd, stated over the weekend, “Next week’s focus will be on the allocation of key cabinet portfolios such as Finance, Defense, Roads, Energy, Commerce, and Railways. The market will continue to be volatile with an upward bias.”
Dalal Street experienced a significant decline on the day of the Lok Sabha election results, with the Sensex dropping by 4,389.73 points and the Nifty falling by 1,379.40 points. Despite this, the National Democratic Alliance (NDA) secured a comfortable majority, leading to a swift recovery in the markets. All losses incurred on June 4 have been recovered in subsequent sessions, with indices now at record highs.
“After the roller-coaster ride last week, the market is likely to take a breather in the near term. It is important to understand that the major driving force in this bull market is the Indian retail investors, including HNIs. Big selling by FIIs is getting eclipsed by the aggressive buying of DIIs and retail investors,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. “This is a structural long-term trend. FII selling on concerns of high valuations will be easily absorbed by DII plus retail buying. However, retail investors should not chase highly valued mid and small caps. Safety is in large caps.”
The swearing-in event at Rashtrapati Bhavan, attended by several senior political leaders, diplomats, industrialists, Bollywood actors, and other prominent personalities, also saw international participation from leaders such as Nepal PM Pushpa Kamal Dahal ‘Prachanda’, Sri Lanka President Ranil Wickremesinghe, Bhutan PM Tshering Tobgay, Maldives President Mohamed Muizzu, Mauritius Prime Minister Pravind Jugnauth, Seychelles Vice President Ahmed Afif, and Bangladesh PM Sheikh Hasina.
PM Modi’s third term marks a continuation of his foreign policy outreach, similar to his previous terms where he engaged with SAARC and BIMSTEC leaders. The new council of ministers combines experienced BJP leaders and first-time MPs, aiming to drive India’s development agenda forward.
A meeting of the Union Cabinet is scheduled for 5 pm today.
