On Monday, June 17, both the NSE and BSE will observe a holiday in celebration of Bakri Id. This respite offers a moment of reflection for investors amidst the flurry of market activity and the ongoing Lok Sabha elections.
The past few weeks have been a rollercoaster for the Indian stock market. The Sensex and Nifty 50, two of the country’s primary market indices, ended May on a positive note after a stretch of subdued performance.
On May 31, 2024, the markets wrapped up the last five trading sessions with modest gains. This rebound was bolstered by strong performances from heavyweight stocks like HDFC Bank, ICICI Bank, L&T, and Reliance, which helped lift market sentiments and reverse the recent downtrend.
This upward momentum hasn’t come without its challenges. The Indian stock market has been under pressure due to various factors, not least of which is the uncertainty surrounding the ongoing Lok Sabha elections.
The final phase of voting commenced on June 1, with 57 seats up for grabs across seven states and one Union Territory. Among the prominent figures contesting this phase is Prime Minister Narendra Modi, adding a layer of intrigue and speculation to the electoral process.
Market experts have highlighted several other elements contributing to the recent volatility. Significant capital outflows by foreign institutional investors (FIIs) have been a cause for concern, as has the fluctuating global economic climate. Expectations of interest rate cuts have diminished, further adding to the market’s apprehensive mood. Additionally, geopolitical tensions have continued to cast a shadow over investor confidence, complicating the market’s outlook.
Despite these challenges, the domestic market showed signs of resilience as May drew to a close. On the last trading day of the month, the Sensex ended with a 76-point gain, closing at 73,961.31. The Nifty 50 also posted a 42-point rise, ending at 22,530.70. This positive performance was reflected in the broader market as well, with mid and small-cap indices also finishing higher.
Dr. Joseph Thomas (Head of Research at Emkay Wealth Management) provided some perspective on the current market situation. He noted that while the equity market remained volatile with a downward bias throughout the week, the robust economic fundamentals and secular uptrend remain intact. However, the market’s recent relative expensiveness could lead to some profit booking as investors seek to capitalize on gains amidst the prevailing uncertainty.
Looking ahead, the upcoming week is likely to keep investors on edge. As the counting of votes for the Lok Sabha elections begins, the market will be closely watching for indications of the final outcomes. The political landscape and its implications for economic policy will play a critical role in shaping market sentiment and direction.
Meanwhile, the holiday on June 17 offers a brief respite for market participants, allowing them to regroup and reassess their strategies. With several more holidays, including Muharram, Independence Day, Gandhi Jayanti, Diwali, Guru Nanak Jayanti, and Christmas, the trading calendar for 2024 is punctuated with breaks that could provide periodic opportunities for reflection amidst the market’s relentless pace.
