What a historic week it is! The market staged spectacular performance with not only Nifty & Sensex, but also Bank Nifty hitting record highs after Narendra Modi elected as Prime Minister for second time in a row.
BJP-led National Democratic Alliance got a thumping majority by winning 353 seats in Lok Sabha elections 2019 on May 23, which was a great show by the ruling party and similar to exit polls forecast.
As a result, the Nifty50 crossed 12,000 milestone and the BSE Sensex 40,000 level for the first time in history, gaining 4 percent each to end record closing high during the week ended May 24. In addition, Bank Nifty also hit a new high of 31,705 and saw a record close by rising 6 percent in a week.
As the market rallied sharply, investors, too, became wealthier by a whopping Rs 6 lakh crore during the week. The total BSE market capitalisation increased to Rs 152.7 lakh crore on May 24, from Rs 1.46 lakh crore on May 17.
If we consider the day when this rally started which is February 19 this year immediately, the market capitalisation jumped by Rs 16.46 lakh crore and the Nifty rallied from 10,600 levels to 12,041, the historic high.
"This landslide victory has raised hopes that the government would take decisive actions to boost business sentiment and that in turn will support the market growth," Jayant Manglik, President - Retail Distribution, Religare Broking told Moneycontrol.
He feels this feel good factor could extend next week too, provided feeble global cues do not spoil the party. Traders should maintain positive yet cautious approach and focus more on stock selection, he said.
Another good part seen during the week was sharp fall in volatility index. India VIX corrected by 41 percent during the week from 28.08 to 16.46 levels.
During the week, it made a 44-month high of 30.18 but post the Election outcome it fell drastically to 16.46 levels.
Decline in VIX suggests that now short term stability and formation of higher base is seen in the market, Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
After election results, Jimeet Modi, Founder & CEO at SAMCO Securities & StockNote said a wait and watch approach should be followed by markets atleast till the Monetary Policy and Budget announcement by the newly elected Government, which might be a game changer.
Investors must ideally avoid large caps as they are in the overvalued zone while selective beaten down mid and small caps could be bought into, he advised.
The broader markets outperformed frontline indices. The Nifty Midcap 100 index rallied 4.88 percent and Smallcap index gained 6.7 percent during the week.