Stock Market Today: Sensex, Nifty Stage A Recovery After Tuesday Rout

India's equity gauges staged a strong recovery as it recovered most of the losses incurred by the worst market crash in four years in the previous session. The surge comes after the NDA pledged support for the alliance to form a government for the third term.

The NSE Nifty 50 closed 688.95 points, or 3.15%, higher at 22,573.45, while the S&P BSE Sensex ended up 2,303.1 points, or 3.2%, at 74,382.

Intraday, Nifty rose as much as 3.59% to 22,670.4, the highest intraday rise since Feb. 1, 2021; while Sensex advanced 3.41% to 74,534.8. During the session, the Nifty 50 companies' market capitalisation rose by Rs 5 lakh crore.

After opening at Rs 83.46, the Indian rupee strengthened 15 paise to Rs 83.37 against the US dollar. The yield on the 10-year bond was trading flat at 7.03%.

The stock volatility gauge, India VIX—which rose over 50% during poll counting—fell over 30% to 18.6 during the session.

Indian market exhibited a spirited recovery driven by broad based buying across various sectors, as political stability appears assured, according to Vinod Nair, Head of Research, Geojit Financial Services. "However, attention will remain on the formation of the government and the forthcoming RBI policy meeting."

The market does not expect any change in RBI’s policy stance given persistent high food inflation, and an expectation of an increase in government spending, which has led to a notable traction in FMCG stocks, Nair said.

All Nifty stocks ended higher during the session with HDFC Bank Ltd., ICICI Bank Ltd., Reliance Industries Ltd., Mahindra & Mahindra Ltd., and Axis Bank Ltd., contributing the most to the Nifty.

All Nifty sectors rose on Wednesday while Nifty Metal and Auto advanced the most.

The broader markets were higher as the BSE MidCap closed 4.41% higher and the BSE SmallCap ended 2.93% higher.

All 20 sectoral indices on the BSE rose. Telecommunication rose the most and capital goods underperformed.

The market breadth was skewed in the favour of buyers. Around 2,557 stocks advanced, 1,224 rose, and 97 remained unchanged on the BSE.

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India's benchmark equity indices recovered on Wednesday, after facing the worst market crash in four years in the previous session, after Andhra Pradesh Chief Minister-Elect Chandrababu Naidu reiterated his commitment to the National Democratic Alliance.

At 12:03 p.m., the Nifty traded 426.70 points, or 1.95%, higher at 22,311.20, while the Sensex gained 1,331.66 points, or 1.85%, to trade at 73,410.71.

On Tuesday, the benchmarks had significantly fallen as the incumbant Prime Minister-led BJP secured lower-than-expected seats. Modi is set to lead a coalition government in his third term if the alliance manages to retain the unaligned Members of Parliament.

Market veterans expect volatility to continue in the coming sessions.

Mayuresh Joshi, head of research at Marketsmith India, attributed the jitteriness in the markets to uncertainty over the reform process and key decision-making by the new government. He advises investors to wait and watch for the next few days.

Aditya Arora, founder of Adlytick.in, noted that in the case of a coalition government, policymaking could change, and the focus could shift from capex to infrastructure. He advises investors to move to the FMCG sector due to its defensive nature.

Technically, the Nifty is expected to stay in the range of 21,500–22,200, according to Sudeep Shah, head of technical and derivatives research at SBICAP Securities. He noted that 21,250 is important support.

Shares of HDFC Bank Ltd., Hindustan Unilever Ltd., Mahindra & Mahindra Ltd., Infosys Ltd., and ITC Ltd., contributed the most to the Nifty.

While those of Larsen & Toubro Ltd., State Bank Of India, Power Grid Corp. Of India, Bharat Petroleum Corp. Ltd., and Grasim Industries weighed on the index.

Except Nifty PSU Bank and Nifty Realty, all sectoral indices rose. Nifty FMCG and Nifty Auto hit a lifetime high.

Broader markets also rose. S&P BSE Smallcap rose 1.74% and S&P BSE Midcap traded 2.61% higher. Nineteen out of 20 sectoral indices on the BSE rose. Only BSE Realty fell. BSE FMCG was the top gainer.

The market breadth was skewed in favour of buyers. Around 2,123 stocks rose, 1,504 declined, and 131 remained unchanged on the BSE.

The swearing-in ceremony of the new government is likely to take place on June 8, NDTV reported quoting sources.