Dalal Street is expected to open on a strong note on November 25 with the Nifty 50 likely to open with a gap up of 300-400 points, as experts believe that the BJP’s strong performance in the Maharashtra elections should boost confidence and bring renewed focus on infra development and spending in the state.
This is significant as the benchmark indices gained over 2.5 percent on Friday, and the recent past has mostly seen such gains followed by a bout of correction. The benchmark Sensex and Nifty are marginally down for the current month, following October’s fall of nearly six percent.
“The BJP's electoral victory is a positive surprise for the NDA government and is likely to elicit a strong reaction from the markets,” said Rajesh Palviya, SVP - Technical and Derivatives Research, Axis Securities.
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Palviya expects a gap up opening for the Nifty in the range of 300-400 points in the first half, potentially pushing the index above the 24,000 mark. If the rally sustains, the Nifty could reach 24,250-24,300 levels in the immediate term, and aggressive short covering above 24,300 could drive it further toward the 100-day moving average, targeting 24,700, he said though he added that surpassing 24,400 could be challenging at current juncture.
The head of a leading mutual fund house with an AUM of nearly Rs 1 lakh crore said that the markets would cheer BJP's strong performance but one will have to wait and watch if the rally would be sustainable.
"The downside risks of BJP losing was much higher than the upside potential as markets were largely factoring in a BJP win. Markets will obviously cheer this win but all eyes would be now on government spending and development. Those factors will determine the sustainability of the rally," the fund house head said, requesting not to be named.
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Deven Choksey, Managing Director of DR Choksey FinServ Private, believes that the markets are likely to open on a strong note with a gap up start with the benchmark Nifty expected to trade within a range of 23,200 to 24,700.
The veteran investor is of the view that the recent market downturn appears to have stabilised following the BJP-led NDA’s victory in Maharashtra though he is cautious on the sustainability of the rally.
The recent correction has created attractive investment opportunities, encouraging investors to capitalise on them, he says while highlighting the fact that with the substantial domestic investor participation, FII activity has become less significant. As long as the market is not trading expensive, return of FIIs is on cards, he said.
The Maharashtra polls saw BJP-led NDA winning 233 out of 288 seats with the BJP alone emerging victorious in 132 seats – not far from the majority mark of 145. Incidentally, this is the best-ever performance by a party/alliance in Maharashtra since 1990.
“The staggering victory of the ruling NDA alliance in Maharashtra should bring the undercurrents back in the markets,” stated a report by Motilal Oswal Financial Services.
“… the BJP’s strong performance (won 132 seats; majority mark 145) will ensure stability in the governance and bring renewed focus on infra development… With elections now behind and the BJP getting a strong boost from Haryana and Maharashtra elections, we expect the government to now focus on spending… This poll result, coupled with a recovery in rural spending (on the back of good monsoon and expected strong Kharif output) should improve the demand narrative at the margin. The wedding season in 2HFY25 (30% higher weddings YoY) will also provide a fillip to demand,” explained the report.
Meanwhile, Palviya is of the view that the recent market correction seems to have found a bottom, and he anticipates Nifty levels of 24,300-24,400 in the near term, while the Bank Nifty could target 51,400-52,000.
Going ahead, Palviya believes the strong electoral mandate in Haryana and Maharashtra underscores public confidence in the government, which could influence FIIs to revisit their stance on Indian markets. He believes that sustained policy reforms and governance stability might mitigate the geopolitical concerns that prompted recent FII outflows.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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