Indian equities surged for the second session in a row on March 9, a day ahead of the election results of the five states. The market sentiment was also upbeat on the news reports suggesting that President Volodymyr Zelensky is no longer pressing for NATO membership for Ukraine. Analysts expect less aggressive move by US Fed, which will also help the markets to improve further.
This was the second straight session when the markets advanced. At 2.20 pm, the benchmark Sensex was up 1273.8 points or 2.38 percent at 54,697.89, while the Nifty 50 climbed 344.75 points or 2.15 percent at 16,358.20.
Here are the key factors behind today's bull run
Election results: Investors are awaiting the results of assembly elections held in five states on 10 March. India Today-Axis My India exit poll results have predicted a Bharatiya Janata Party (BJP) sweep in Uttar Pradesh and a big win for the Aam Aadmi Party (AAP) in Punjab. The exit polls have also given the BJP a clear majority in Manipur, a lead in Uttarakhand while predicting a tight finish in Goa with the Congress.
Russia-Ukraine conflict easing: The various news reports have suggested that the Ukrainian President Volodymyr Zelensky is no longer pressing for NATO membership for Ukraine, a delicate issue that was one of Russia's stated reasons for invading its pro-Western neighbor. In another apparent nod aimed at placating Moscow, Zelensky said he is open to "compromise" on the status of two breakaway pro-Russian territories that President Vladimir Putin recognized as independent just before unleashing the invasion on February 24.
Government policies: According to a Morgan Stanely report, the equity markets are not falling as much as expected by the Ukraine crisis and the sharp spike in oil prices. Morgan Stanley’s argues that there are several reasons behind India’s resilience. "India's policy environment is among the strongest in the world driving India's idiosyncratic growth story and, more importantly, likely creating a new profit cycle. The rise in oil price is a threat but not strong enough in the context of the policy environment", the report said.
As per the brokerage firm, that the oil consumption relative to GDP is at all-time lows and is steadily declining especially since 2014. India's relative real policy rate to the US is at all time high. Monetary policy looks much better placed to handle the inflationary impact from an oil price rise especially when compared to history.
Markets have not fallen even though FPIs have steadily withdrawn capital since October 2021. Since 2014,external funding has shifted dramatically to FDI which is more stable and less sensitive to oil price fluctuations", the report added.
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