Mumbai: It was a day of high volatility on the Dalal Street as the benchmark equity indices – Nifty and Sensex suffered deep cuts in the first few minutes of trading after the initial phase of counting showed a clear lead for the opposition Congress Party over the ruling Bharatiya Janata Party in Gujarat. As counting progressed, investor sentiments took a ‘U’ turn and markets recovered sharply from their early morning losses as soon as the saffron party raced ahead of its opponents in a closely fought election for the 182-member Gujarat assembly.
The Sensex tanked 867.34 or 2.59 per cent to hit an intra-day low of 32,595.63 during the opening bell while the Nifty plunged 258.45 or 2.50 per cent to hit a low of 10,074.80. After staging a spectacular intra-day recovery, the Sensex closed the session at 33,601.68 gaining 138.71 points or 0.41 per cent and the Nifty ended the day at 10,388.75, up 55.50 points or 0.54 per cent.
“The fear was that a poor BJP performance in Gujarat would impact economic policies. In this regard, we note that the election calendar remains very heavy in 2018, as there are eight other state elections scheduled, which include important ones like Karnataka, Chhattisgarh, Madhya Pradesh and Rajasthan. Hence, even though the BJP is on track to form government in both Gujarat and Himachal Pradesh, we still expect some shades of populism to emerge. We expect an increased focus on rural development (higher minimum support prices and rural infrastructure spending), as well as a larger budget allocation for infrastructure, women and social development schemes,” said Sonal Verma, economist at Nomura Financial Services.
According to the provisional data released by the stock exchanges, foreign portfolio investors (FPIs) sold shares worth Rs 431.77 crore while the domestic institutional investors pumped in Rs 1,076.81 crore. “Given that the mandate (for BJP) is slightly lower than that in 2012, it would be a signal for the government at centre to speed up on the unfinished agenda of creating jobs, empowerment of women, improvement in earnings and living condition of the lower class and rural population, creation of better infrastructure, livable spaces for the urban folks among others,” said Arun Thukral, MD & CEO, Axis Securities.