Markets cheer BJP victory in state elections and Fall in crude oil prices

Mr. Devarsh Vakil - Deputy Head Retail Research, HDFC Securities

The benchmark indices closed with strong gains on Thursday for the third consecutive session. A revival in risk-on sentiment as crude oil prices also helped Indian indices.

As predicted by exit polls, markets were expecting BJP to garner a clear majority in Uttar Pradesh. Markets hate uncertainty and the outcome of these state elections will provide policy continuity and stability. Based on this mandate, the Central government will be buoyed to carry out its agenda confidently and look for opportunities to pursue economic reforms. In the past clear political mandates have led to euphoria in markets though that is unlikely to be the case this time around. Macro-economic variables are not conducive for markets to experience a surge as higher crude oil prices have stoked inflation fears. Central bankers around the globe are unwinding their loose monetary policies and rising interest rates will keep markets on the check at higher levels.

Crude oil prices have declined this week with NYMEX WTI Crude oil fell by 20% from last week's high of $130 per barrel to $104 per barrel yesterday. Hindustan Unilever was the top gainer in the index as worries over the rising commodity prices affecting margins receded.

Advances outnumbered the declines for the third day in a row where advance decline ratio stood at 2.62 on BSE, Indicating strong breadth. While cash volumes were higher by 10% as compared to yesterday. F&O volumes surged to an all-time high at 224.7 lakh cr crossing the previous high of 202.45 lakh cr on 17-Feb 2022.

In last 3 sessions, Nifty soared more than 1000 points from lows of 15671 to highs of 16757. Short term resistance zone for the Nifty is seen at 16700-16800. Above 16800, Nifty could move up to 17080 odd levels, where 50 days EMA is placed.

Source : Equity Bulls

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