Market Reversal and Election Anticipation Shape Volatile Week

The past week witnessed a volatile shift in the stock market, reversing the previous week’s gains. Markets fell on four out of five trading sessions but managed to rebound on Friday, marking the start of the new June series. The BSE SENSEX dropped by 1,449.08 points or 1.92%, closing at 73,961.31, while the NIFTY lost 426.40 points or 1.86%, ending at 22,530.70.

Broader market indices also experienced declines: BSE100, BSE200, and BSE500 fell by 1.09%, 1.83%, and 1.73%, respectively. Both BSEMIDCAP and BSESMALLCAP decreased by 1.53%. This contrasted sharply with the previous week’s performance, where BSE SENSEX and NIFTY had gained 1.90% and 2.02%, respectively, effectively nullifying the two-week performance.

The Indian Rupee weakened, losing 36 paise or 0.43% against the US Dollar, closing at 83.46. The Dow Jones experienced a slight recovery on Friday after a losing streak but ended the week down by 383.27 points or 0.98%, at 38,686.32.

Thursday saw the expiration of the May futures. NIFTY, which had been up by 386.75 points or 1.71% at the end of the previous week, closed with losses of 81.70 points or 0.36% at 22,488.65. However, positive economic data emerged over the weekend. The GDP for the fourth quarter stood at 7.8%, bringing the FY24 GDP to 8.2%. The fiscal deficit improved to 5.6% of GDP, and GST collections for May 24 reached Rs 1.71 lakh crore.

Looking ahead, the RBI is expected to maintain its current stance in the upcoming policy meeting, given the easing inflation. Awfis Space Solutions debuted on the bourses, listing shares at Rs 383, which rose to Rs 419.10 before correcting to Rs 402.50.

The final phase of voting concluded on June 1, with exit polls predicting a strong performance by the ruling BJP and NDA-led alliance, suggesting a potential comfortable majority. With the election results due on Tuesday, markets are expected to react with initial rallies followed by volatility. Investors are advised to stay cautious, allowing the election results to solidify before making significant moves. New highs in BSESENSEX and NIFTY could be on the horizon, driven by positive election outcomes and short covering by FPIs.