Indian benchmark index Sensex looks set to test the psychologically important level of 40,000 points on the day of the election results on Thursday (May 23) and Nifty 12,000 points as the markets are continuing their upward momentum gained from the exit polls. The benchmark indices of the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on Tuesday hit all-time highs early in the trade as all major surveys have predicted a landslide majority for Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) in the Lok Sabha elections.
Barring major surprises on the counting day that should see the National Democratic Alliance (NDA) government sail through with more than 300 seats, another intra-day rally for Sensex is quite possible taking it beyond 40,000 points, according to market observers. Sensex touched 39,571 points in the first hour of trade on Tuesday, overtaking the earlier all-time high of 39,475 points set on April 18, the day of the second phase of voting. The National Stock Exchange's (NSE) 50-stock benchmark Nifty hit an all-time high of 11,883 points in the first hour of trade, overtaking the previous high of 11,856 points touched on April 18. The first phase of voting took place on April 11 and the final one on Sunday (May 19).
Nifty Jun FUT was trading at 11,888 at 11 am, as against the benchmark at 11,847 points. The 0.4 per cent premium by 11 am on Tuesday was a marked fall from 0.61 per cent at close on Monday, underscoring the market's increasing worries. Traders have become cautious about the market's direction as they expect some profit taking in the days ahead until the result of the Lok Sabha elections 2019 is finally known. NSE's volatility index India VIX gained 4 per cent to touch 24.65 after opening at 23.67.
The market is likely to continue to trade sideways until new cues of a stable government emerge in the days ahead, according to experts. Among the Nifty components, 30 stocks were declining in the morning trade as against only 19 advancing ones.
Pharma stocks were trading in the positive, up 1.67 per cent on Nifty. Constituent stocks except for Glenmark Pharmaceuticals and Cadila Healthcare were the green, with Dr Reddy's Laboratories gaining biggest as it went up 3.73 per cent. Cadila Healthcare was the biggest loser, down 0.58 per cent.
The Asian markets were in the red early on, tracking the overnight losing streak of the US and European markets. International crude edged up on signs that producer club OPEC would continue the supply squeeze and tensions between the United States and Iran escalated. Saudi Arabian claims of thwarting Yemeni Houthis bid to attack Mecca also added to the tensions. Wall Street ended lower on Monday as the White House's restrictions on Chinese telecoms equipment maker Huawei Technologies weighed down technology stocks and raised concerns that the move would further inflame trade tensions between world's two biggest economies.