Market Recovery: Sensex and Nifty Bounce Back After 6% Slump

by | Jun 5, 2024 | 0 comments

The stock market in India has recovered well from the previous day’s crash. On June 5, Sensex and Nifty opened higher with FMCG and IT stocks leading the gains. Experts say that if policy continuity is maintained, markets will have a potential for long-term growth after an initial volatility.

Key Drivers of Market Recovery

FMCG and IT Stocks Lead the Gains

Nifty FMCG index surged driven by Hindustan Unilever (HUL), ITC, Britannia etc. which gained between 2.4% – 6.4%, were a big support to overall market recovery.

Market Sentiments and Expert Opinions

Markets are likely to recover and thrive in the long term if policy continuity is maintained, said Pradeep Gupta, Co-founder and Vice-chairman of Anand Rathi Group. Gaurang Shah, Senior Vice President at Geojit Financial Services also shared his views stating that sell off in previous session followed by bounce back can give buying opportunity at lower levels.

Market Performance Highlights

Opening Bell: Positive Start

At around 09:30 am, Sensex was up 454 points or 0.6% at 72,533; while Nifty climbed 125 points to trade near 22,009 levels. Market breadth was balanced as about 1,436 shares were advancing against 1,406 declining shares on BSE. Notably, another 98 remained unchanged.

Major Contributors and Laggards

Contributing most to Nifty’s gains were HDFC Bank HUL and ITC among others; while NTPC Hindalco L&T were among the losers today so far . Shares of Hindalco fell nearly five per cent after it announced postponement of Novelis’ IPO; BEL dropped over five per cent following downgrade from CLSA.

Broader Market Indicators

Volatility Index and Midcap / Smallcap Performance

India VIX , a measure of volatility declined about 17% at around The broader market traded weak with BSE Midcap falling near half a percent ; while the BSE Smallcap shed nearly one-and-half percent thus indicating some more pressure in select pockets rather than across-the-board strength.

Political Factors Influencing the Market

Major slump in Nifty on June 4 was attributed to uncertainty over Bharatiya Janata Party’s power for third term. Deepak Jasani, Head of Retail Research at HDFC Securities said that Nifty could swing between 21710-22417 till there is clarity on govt formation.

Sectoral Insights and Future Outlook

Increased Scrutiny in Key Sectors

Capital goods , power , defence , manufacturing etc are sectors which are seeing increased scrutiny and valuation discipline; this trend would continue as investors look for stability and sustainable growth opportunities – Rahul Singh, CIO-Equities, Tata Asset Management

Market Valuation Concerns

Indian equities are overvalued but election results provide a perfect reason for correction so another 10% correction cannot be ruled out, however market should stabilize around levels with stable coalition – says Amar Ambani, Executive Director of YES Securities.

Conclusion

The ability of Indian stock markets to bounce back from steep falls is exemplified by the recovery in Sensex and Nifty. Still, political uncertainty and worries about overvaluation continue to loom. However, general feelings are optimistic though cautious at this point. With that being said investors are keeping a sharp lookout for government action as well as indications on which way the market may go from the forthcoming Union Budget.

Investors who want to stay ahead should keep themselves updated with what’s happening in various sectors and be aware of any changes in policies; this will help them navigate through volatile periods while also allowing for more chances of benefiting from opportunities presented by such times. And just like before it has always been important during these fast-moving days that one has an investment plan covering different areas as well taking into account long-term goals.

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