Indian stock indices, Sensex and Nifty, hit record highs on Monday due to the ruling party's recent state election victories, strong domestic economic data, and expectations of a US rate cut in March.
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During Monday's market opening, India's primary indices, Sensex and Nifty, reached unprecedented heights following the recent victory of the ruling Bharatiya Janata Party (BJP) in state elections, alongside strong domestic economic data and expectations of a US rate cut in March, stated ANI report. Experts analysing the surge provided insights into the factors fuelling this impressive rally, the report added.
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Sunil Shah attributed the market rise to the positive state election results, stating, "The market feels confident due to the recent election outcome, showing support for the ruling party."
"It's a huge mandate by the people and that makes the market feel very comfortable that if this was considered to be semi-final, the final will be played in May and the outcome is now more predictable than before. So investors are confident about the continuation of the policies and this growth momentum and the thrust of the government where it is, so the growth is the focus area of the government," he further told ANI.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, emphasized the importance of political stability and a pro-market government, saying, "The market favours stability and a government focused on reforms. The election results were better than anticipated, triggering renewed optimism."
Vijaykumar highlighted the ongoing market exuberance, driven by global factors such as the decline in the US 10-year bond yield. He told ANI, "The market has already partly discounted a BJP victory with a 500-point rally during the last 4 sessions. But the mood is so exuberant that the rally will continue. The global backdrop also is favourable with the US 10-year bond yield declining to 4.23 per cent. An across-the-board rally in stocks is in the offing. A restraining factor will be the valuations which are high and will get stretched further with the rally gaining momentum."
Dr Vijayakumar recognised potential challenges ahead, particularly high valuations impacting market movements despite the short-term optimism. "In the near-term, the market will ignore fundamentals and move up, but soon high valuations will trigger some selling," he noted.
The Indian stock market's buoyancy is shaped by political events, economic data, and global influences, creating a constantly evolving financial landscape. Investors are cautious as the market navigates through these dynamics, balancing enthusiasm with underlying economic fundamentals.
With ANI inputs
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