What’s going on?
Indian stocks surged over 3% on Tuesday, with the NSE Nifty 50 index rising to 22,620.35 points and the S&P BSE Sensex climbing to 74,382 points after key political support was secured.
What does this mean?
The market reaction came as the Telugu Desam Party and Janata Dal (United) pledged support for Prime Minister Narendra Modi’s government, bolstering market confidence following the Bharatiya Janata Party’s narrow victory in which it lost its majority in parliament. Modi is due to be sworn in for a third term on June 8. The new political stability came as relief after the benchmark index slumped nearly 6% on Tuesday, its worst session since March 2020. Big bank shares rose 4.5% and financial services added 4.2%.
consumer
Housing stocks rose 4 percent, auto stocks surged 4.2 percent on hopes of stronger rural demand, and information technology stocks rose 2.4 percent.
Why should you care?
For markets: Riding the wave of political clarification.
The surge in Indian markets reflects a return of investor confidence, especially with the Nifty index rising.
Volatility
The index fell to 18.66, its lowest since May 27, following heavy selling by foreign institutional investors (FIIs) amounting to 124.36 billion rupees (about $1.5 billion). Adani Ports was the biggest gainer, surging 8.5 percent after a sharp drop earlier.
Overall picture: Stable leadership, steady growth.
Market experts at HDFC Securities and Quantum Securities highlighted that political support has reduced uncertainty, suggesting possible sector rotation until policy decisions become more clear. Goldman Sachs also highlighted that India’s macroeconomic resilience and strong growth fundamentals should continue to attract investors, predicting a recovery in foreign fund inflows now that election risks have eased.
