pre-elections-rally-boost-market-sentiment

As the new financial year begins and general elections loom on the horizon, investors are directing their attention towards quality midcap and smallcap stocks. On Monday, benchmark indices Nifty 50 and Sensex closed higher, primarily fueled by a robust buying interest in financial shares. 

 

Nine out of the major 13 sectoral indices recorded gains, with the Nifty Bank surging over 2 percent to achieve a lifetime high of 49,473.60, buoyed by strong performance from ICICI Bank and SBI Life.

 

At the closing bell, the Sensex soared by 941.12 points or 1.28 percent, reaching 74,671.28, while the Nifty 50 climbed by 215.00 points or 0.96 percent, touching 22,635.00. Market data revealed that 1,714 shares advanced, 1,645 shares declined, and 126 shares remained unchanged.

 

In the broader market scenario, BSE Midcap closed 0.8 percent higher, while BSE Smallcap ended flat, indicating a mixed performance across different segments.

 

Several factors contributed to the upward trajectory of the Nifty 50 and Sensex on Monday:

 

1.Rally in Banking Shares: 

 

 ICICI Bank witnessed a nearly 5 percent surge following a solid performance in the January-March quarter (Q4FY24). Market analysts anticipate a re-rating of the bank, citing robust deposit growth, healthy asset quality, and attractive valuations.

 

SBI also rose over 3 percent, fueled by reports suggesting government approval for its exit from Yes Bank.

 

2.Optimism in Asia:

 

Asian stock markets experienced gains on April 29, with technology shares mirroring the strong performance of their Wall Street counterparts. The Chinese stock market, in particular, advanced after the government eased certain restrictions on the property market, fostering positive sentiment among investors.

 

3.Pre-Election Rally: Market participants are strategically focusing on quality mid and smallcap stocks, particularly those associated with government-backed sectors such as railways, defense, construction, rural development, and solar panels.

 

However, despite the overall positive trend, Nifty Realty witnessed a decline of over 1 percent, while IT and Auto indices closed in the red.

 

4.Retreating Yield: The 10-year benchmark US Treasury yield declined to 4.67 percent on April 26, contributing to gains in the equity market.

 

Lower yields tend to attract investors to equities, driving up stock prices.