Markets bounce back sharply after massive drop on value-buying at lower levels

Mumbai, Jun 5 (PTI) Benchmark equity indices Sensex and Nifty began the trade on an optimistic note on Wednesday and jumped sharply during the afternoon deals after facing heavy drubbing in the previous trade as value-buying at lower levels led to an uptrend in the markets.

Making a strong comeback after Tuesday's sharp decline, the 30-share BSE Sensex jumped 1,772.04 points to 73,851.09 during the afternoon trade. The NSE Nifty went up by 560.5 points to 22,445.

While the NDA is comfortably above the majority mark of 272 in the 543-member Lok Sabha, the BJP has fallen short of the magic number for the first time since 2014 and is critically dependent on its allies for government formation.

The Election Commission has declared results for all 543 Lok Sabha constituencies, with the BJP winning 240 seats and the Congress 99.

"Despite the reduced majority, we expect the policy agenda of Modi 2.0 (investment-led growth, capex, infrastructure creation, manufacturing, etc.) to continue, although with some tweaks. We also expect some populist measures to address rural stress and lift sentiments at the margin, given the nature of the verdict," as per a report by Motilal Oswal Research.

Among the 30 Sensex companies, Mahindra & Mahindra, Hindustan Unilever, Asian Paints, IndusInd Bank, Kotak Mahindra Bank and Nestle were the biggest gainers.

Larsen & Toubro, Power Grid and State Bank of India were the laggards.

"The market will take some time to absorb the unexpected election results. Stability will return to the market soon but volatility will continue till there is clarity on the cabinet and the key portfolios,"said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

One positive of the sharp market correction is that the excessive valuations have moderated a bit and this will facilitate institutional buying once clarity emerges on the formation and composition of the cabinet, he added.

In Asian markets, Seoul quoted with gains while Tokyo, Shanghai and Hong Kong traded lower. US markets ended in positive territory on Tuesday.

Global oil benchmark Brent crude dipped 0.04 per cent to USD 77.49 a barrel. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 12,436.22 crore on Tuesday, according to exchange data.

Markets had the worst trading day in four years on Tuesday as the BJP fell short of the magic number for the first time since 2014.

The BSE benchmark Sensex nosedived 4,389.73 points or 5.74 per cent to settle at a more than two-month low of 72,079.05 on Tuesday.

In the day trade, the barometer tanked 6,234.35 points or 8.15 per cent to hit a nearly five-month low level of 70,234.43. The NSE Nifty tumbled 1,982.45 points or 8.52 per cent to 21,281.45 during the day.

Later, it ended at 21,884.50, a sharp decline of 1,379.40 points or 5.93 per cent.