NDA government 3.0 hopes fuel Street rebound

Analysts said the market may remain volatile untila government is formed, and see limited upsides currently The NSE rose 735.85 points, or 3.36%, to close at 22,620.35. It has declined 0.10% in the last five trading sessions after seeing volatility this week. The BSE Sensex rose 2,303.19 points, or 3.2%, to end at 74,382 24. It has gained 0.31% in the week since May 30. Banks, metals and consumer stocks led therally.

"The market will continue to see some volatility as it is now wait ing for the government to be formed," said Andrew
Holland, CEO, Avendus Capital Public Markets Alternate Strategies. "Once it is established that there is business as usual, we can see the continuation of growth in defence, renewable, power and infrastructure sectors as the government would be expected to invest in them."

Nifty's Metal, Private , and Auto indices were top gainers of the day at 4.3-5.8%. Out of the total 3,918 stocks traded on the BSE, 2,597 advanced and 1,221 declined.

ET Bureau

Bank, FMCG, may do well
The risk-off sentiment on Tuesday took hold after the BJP failed to secure enough seats by itself in the general elections to form a government. Investors have been worried the presence of may slow down the 's plans to push through crucial .

"Nifty saw a bounceback from the oversold territory on Wednesday, and its near-term support is placed at 22,200 levels, and may head to 22,900 in a few days," said Dharmesh Shah, head of technicals at .

Shah expects banking, FMCG, pharmaceuticals and infrastructure stocks to do well in the near term.

Holland said there's some doubt in the market on how much the new government will focus on capital expenditure versus consumption but the higher Reserve Bank of India (RBI) dividend has given it leeway to focus on both, and more will be known in the full , expected in July.

The RBI had paid a higher-than-expected dividend of Rs 2.1 lakh crore to the government for FY24.

More clarity after budget
"India had been enjoying a premium based on the fact that a BJP-led government majority would be achieved and now the country may lose the premium and have to regain confidence in the market," said Holland. "Investors can choose to wait on the sidelines and find more clarity in the budget before choosing to buy beaten-down stocks."

The Nifty's Volatility Index or VIX, a fear gauge, fell 29.4% to 18.88 on Saturday, after gaining over 100% in the month prior to the vote count on June 4. "We also saw the VIX fall almost 30% in a single day, indicating the market's fear getting resized and that we may see stability in the market in the coming days," said Shah.

The Nifty Midcap 150 gained 3.86% and the Nifty Small-cap 250 rose 3.31% at the close on Wednesday.