The stock market witnessed its worst intra-day fall in 11 years on Thursday, after the Sensex and Nifty surged to new peaks on Narendra Modi’s emphatic election win.
The stock market witnessed its worst intra-day fall in 11 years on Thursday, after the Sensex and Nifty surged to new peaks on Narendra Modi’s emphatic election win. Notably, the 30-share index touched a new all-time high of 40,124.56, while the Nifty touched a fresh peak of 12,041.15 today. The surge in the shares comes even as trends indicate that the Narendra Modi-led NDA got its biggest mandate since 1984. Interestingly, the Sensex’s latest feat comes just days after it had hit a peak of 39,571.13 buoyed by exit poll results over the weekend, even as the Nifty moved to 11,883.55 on the same day. The volatility index posted its biggest one-day fall since 2014 poll result day.
Explaining the major reasons behind the Sensex’s roller coaster move, Naveen Kulkarni, Head of Research, Reliance Securities said that with the major event getting over, stock market participants are booking profit after a sharp rise in the previous few sessions ahead of the results. “While we remain positive on the market, valuations are not cheap, there are challenges of not so encouraging earnings growth, lower liquidity, slowing economy and global challenges,” Kulkarni told Financial Express Online.
Watch: Why Sensex hit 40,000 today, and what next for Stock Market
According to technical analyst Milan vaishnav, the markets have now entered into a prolonged period of broad consolidation. “We have maintained all throughout our previous views that even if the BJP returns to center with great majority, the positive impact may remain limited. The primary reason for this view is that once the elections get out of our way, the global factors and macro-economic factors along with broader technicals will take over,” Milan Vaishnav Consulting Technical Analyst, at Gemstone Equity Research & Advisory Services told Financial Express Online. According to the expert, 12,000 on Nifty has become an intermediate top for the markets going ahead. “If we look at the charts on a closing basis, the multipoint resistance levels of 11760-11860 still remain intact as a clean breakout has continued to elude the markets,” he added.
According to Nikhil Kamath of Zerodha, the stock market has run ahead of its fundamentals, buoyed by sentiment over the short term. “It might be prudent to wait for the inherent fundamentals to catch up before waging big directional bets on the market right now,'” Nilkhil Kamath, Co-Founder & Chief Investment Officer, Zerodha said.