Market Sentiment Expected to Improve Following Mahayuti’s Victory; Rally Likely from Tomorrow
New Delhi : The domestic stock market, which has been under pressure since October, might see a positive turnaround after the Maharashtra election results. Persistent selling by foreign institutional investors (FIIs) and weak quarterly results from most companies have been weighing heavily on the market. However, experts suggest that the decisive victory of the Mahayuti alliance in Maharashtra could act as a trigger for market recovery.
Prashant Dhami, Vice President of Dhami Securities, believes that the Mahayuti’s win has reinforced the developmental agenda of the state government. He suggests that this victory might boost investor confidence in the BJP-led administration, potentially easing market pressure. Dhami noted that the market has been seeking a catalyst, and this political development might be the one to drive recovery. He further emphasized that aggressive buying by domestic institutional investors could offset FIIs’ selling, leading to a bullish trend.
The market closed with over 2% gains on Friday, signaling optimism even before the election results were declared. Analysts anticipate that the Mahayuti’s victory could sustain this positive momentum and even attract FIIs back to the domestic market, paving the way for significant growth.
Ravikant Mittal, CEO of Mittal Associates, echoed similar sentiments, stating that Friday’s rally was driven by expectations of the Mahayuti’s win. The Sensex surged by 1,961 points, and the Nifty climbed 557 points, reflecting pre-election optimism. With the results now confirming the victory, the markets could witness a strong rally on Monday, potentially seeing the Nifty climb by as much as 1,000 points during short-covering.
Rohit Pavaneja, CEO of Pavaneja Securities and Financial Services, called the Maharashtra election results a better-than-expected outcome that could significantly improve market sentiment. He highlighted the need for government spending, particularly in the mid-cap and small-cap segments, which remain overvalued. Pavaneja also pointed out opportunities in selective large-cap stocks and expects FIIs to reduce selling and start investing in specific sectors, further boosting sentiment.
However, not all experts are entirely optimistic. Pawan Bagga, Vice President of MSPL Securities and Commodities Services, cautioned that while the election results might provide immediate relief to market sentiment, concerns over earnings growth and high valuations persist. He advised investors to trade cautiously, warning that the market’s Friday reversal might not sustain for long.
Bagga added that despite the positive outcome in Maharashtra, it is uncertain whether the market will touch all-time high levels in the short term. With valuations remaining elevated, a significant correction could occur at any time.
In summary, while the Mahayuti’s victory is expected to bolster investor confidence and market sentiment, experts advise caution amid ongoing concerns about valuations and earnings growth.