Current Market Update: Nifty 50 and Sensex Reach Record Levels. Exit Polls to GDP Figures - 4 Factors Driving the Market Surge

Investors engaged in heavy buying across all sectors, propelling the midcap and smallcap indices to new record highs with gains of nearly 4%.

The BSE Midcap Index surged by 4% to reach its new all-time high of 44,560.97, while the BSE Smallcap Index jumped 3.6% to a fresh record high of 48,973.96.

Around 200 stocks, including SBI, ICICI Bank, Axis Bank, Bharti Airtel, Larsen & Toubro, Mahindra & Mahindra, NTPC, and Power Grid, hit new 52-week highs during intraday trading on the BSE on Monday.

Stock Market Today: On Monday, June 3, during intraday trading, both Sensex and Nifty 50 leaped by almost 4%. Photographer: Robert Chaplin/Bloomberg News. (Bloomberg)

In May, due to increased volatility from election-related uncertainty, Nifty 50 and Sensex broke their three-month winning streak and closed in the negative territory. The volatility index India VIX rose by 91% in May. While the exit poll results were the primary catalyst, experts identified three additional factors that bolstered market sentiment. Here are the four significant triggers that propelled the market to record highs: Nifty 50

Exit Poll Results: As reported by Mint, on June 1, most exit poll results predicted a historic third term for Prime Minister Narendra Modi's National Democratic Alliance (NDA) government at the center. According to at least ten exit polls, the BJP-led NDA is expected to win over 350 seats. Three major exit polls—India Today-My Axis India, India TV-CNX, and News24-Todays Chanakya—forecasted more than 400 seats for the NDA. Pollsters predicted less than 200 seats for the opposing INDIA bloc. With the conclusion of the Lok Sabha elections, analysts anticipate that barring any unforeseen negative developments, the market will remain in positive territory in the coming days. "We expect Indian equities to rise in the next 3-4 days, and Nifty could reach a new all-time high this week. During this period, we foresee Nifty reaching around 23,200-23,300 levels. Additionally, we anticipate the 10-year yield reaching 6.9% and the Indian Rupee at 82.75," said Amit Goel, Co-founder and Chief Global Strategist at Pace 360.

Macro Boost: According to data released by the National Statistical Office (NSO) on Friday, May 31, India's GDP for the January-March quarter of FY 2023-24 (Q4FY24) was 7.8%, with the economy growing at a better-than-expected 8.2% for the full FY 2024. Additionally, data from the Controller General of Accounts (CGA) released on Friday, May 31, indicated that the fiscal deficit for 2023-24 was 5.63% of GDP, slightly better than the 5.8% estimated in the Union Budget. The GDP growth figure of 8.2% on Friday exceeded expectations, providing fundamental support to the market. "The upward revision of India's rating outlook by S&P is also positive," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. Last Wednesday, S&P Global revised its outlook on India to positive and stable after 14 years, citing strong macroeconomic fundamentals and government capital expenditure. However, the rating agency kept its sovereign credit rating unchanged at 'BBB-/A-3', the lowest investment grade. They noted that cautious fiscal and monetary policies could lead to a rating upgrade in the next two years.

Broad-based Buying: Broad-based buying was observed in sectors led by banking, financial, metal, realty, and oil & gas. The Nifty Bank index surged by over 4% to a new record level of 50,990. During the morning trade, the Nifty PSU Bank index rose nearly 7%, while the Realty, Metal, and Financial Services indices climbed up to 4%.

Positive Global Cues: Positive global cues also supported domestic market sentiment. Inflation remains stable, but expectations of rate cuts in Europe are increasing. The US Fed is also considering rate cuts in the second half of the year. Additionally, recent macro data from some major Asian economies has been positive. According to Reuters, Japan's factory activity grew in May for the first time in a year, while South Korea's factory activity expanded at the fastest pace in two years.

Aaj Tak