Market Commentary - End-Session
Investors dump stocks as election jitters trigger market plunge; Nifty ends below 21,900 As on : 04-Jun-24  17:55

The domestic equity market crashed today, as both the Nifty and the Sensex experienced their sharpest single-day decline since March 2020. Concerns over a potential weaker mandate for the BJP instilled a sense of unease, casting a shadow on India's growth prospects. The Nifty closed below the 21,900 mark, with almost all sectoral indices ending in negative territory. The Nifty PSU Bank index tumbled by 15.14%, while the Nifty Oil & Gas index saw a substantial drop of 11.80%.

Latest poll trends indicate a more competitive stance from the INDIA block than initially anticipated, suggesting that the Narendra Modi-led NDA might face challenges in securing a significant victory. This unexpected turn of events caused the BSE Sensex and Nifty50 to plummet by almost 6%, a stark contrast to the 3% gains witnessed on Monday due to optimistic exit poll projections.

The unfolding election results point towards a potential coalition government, indicating a need for alliances to navigate key policy decisions and cabinet allocations. Such a scenario raises concerns about policy paralysis and governmental uncertainty. Market participants are factoring in the associated risks and the prospect of a shift towards more socialistic policies, resulting in a market sell-off. While there is apprehension about a departure from the reform-oriented approach of previous terms, traders are awaiting further developments for a clearer perspective.

The barometer index, the S&P BSE Sensex was tumbled 4,389.73 points or 5.74% to 72,079.05. The Nifty 50 index tanked 1,379.40 points or 5.93% to 21,884.50.

Adani Ports & SEZ (down 21.26%), Adani Enterprises (down 19.35%) and Reliance Industries (down 7.53%) were major drags.

The broader market underperformed the headline indices. The S&P BSE Mid-Cap index dropped 8.07% and the S&P BSE Small-Cap index slumped 6.79%.

The market breadth was skewed in favour of declines. On the BSE, 488 shares rose and 3349 shares fell. A total of 97 shares were unchanged.

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, soared 23.65% to 25.89

Lok Sabha Elections:

The Election Commission of India is currently tallying over 600 million votes cast by Indian citizens to elect the next national government. The counting process commenced at 8 am local time, with the final results expected to be revealed later today. The focus is on the 543 Lok Sabha seats, and while Prime Minister Narendra Modi's Bharatiya Janata Party is anticipated to be the largest party, it might need coalition partners to secure a majority. The BJP-led alliance is foreseen to surpass the crucial 272-seat mark. On the other hand, the opposition INDIA alliance, spearheaded by the Congress party, is demonstrating stronger performance compared to earlier exit poll predictions.

As per the latest tally, BJP-led NDA government is leading on 291 seats, while INDIA block is leading on 234 seats. A party or coalition needs 272 seats to cross the majority mark in the 543-member Lok Sabha,

Numbers to Track:

The yield on India's 10-year benchmark federal grew 1.22% to 7.032 as compared with previous close 6.947.

In the foreign exchange market, the rupee is edged lower against the dollar. The partially convertible rupee was hovering at 83.5600, compared with its close of 83.1450 during the previous trading session.

MCX Gold futures for 5 June 2024 settlement fell 0.01% to Rs 71,725.

The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, was up 0.12% to 104.27.

The United States 10-year bond yield declined 0.32% to 4.385.

In the commodities market, Brent crude for Aug 2024 settlement lost $1.34 or 1.71% to $78.36 a barrel. This follows the decision by OPEC+ to gradually increase production, reducing overall output cuts.

Global Markets:

The Dow Jones index futures were down 117 points, indicating a weak opening in the US stocks today.

Markets in Europe and Asia declined on Tuesday. This comes as global investors grapple with the possibility that the exceptional growth of the US economy might be coming to an end. This concern stems from further signs of weakness in US manufacturing activity.

US stocks opened June on a negative note. The Dow Jones Industrial Average fell after weak manufacturing data raised doubts about the economy's strength. Sectors reliant on economic growth, such as banks and industrials, led the decline. Despite the Dow's decline, the broader S&P 500 and tech-heavy Nasdaq Composite managed small gains.

The U.S. manufacturing sector showed signs of slowing, with the ISM manufacturing index measuring 48.7 in May, sending Treasury yields and the dollar lower. A reading below 50 is an indication of a contraction.

On a brighter note, chipmaker Nvidia defied the market trend with a near 5% surge on Monday. This rise came after the company announced a new line of artificial intelligence chips, showcasing their commitment to staying competitive in the rapidly evolving market.

Stocks in Spotlight:

Redington lost 1.59%. The firm said that its board has recommended a dividend of Rs 6.20 per share for the financial year ended 31 March 2024, subject to the approval of shareholders.

Sapphire Foods India shed 0.41%. The company said that its board will meet on Wednesday, 19 June 2024, to consider a proposal for sub-division/split of existing equity shares of the company.

Wipro declined 1%. The company announced that it has appointed Bruno Schenk as the country head and managing director (MD) for Switzerland effective immediately.

Mahindra & Mahindra Financial Services (Mahindra Finance) slipped 4.91%. The firm recorded an overall disbursement of approximately Rs 4,430 crore in May 2024, delivering 7% year on year (YoY) growth.

Kalyan Jewellers India slipped 1.14%. The company said that it has signed definitive agreement with Rupesh Jain to acquire 15% stake in Enovate Lifestyles for total consideration of Rs 42 crore

Rail Vikas Nigam tumbled 13.09%. The company announced that it has received a letter of acceptance (LoA) for engineering, procurement and construction (EPC) order from South Central Railway worth Rs 440 crore.

Biocon fell 5.87%. The company announced that it has received approval from the U.S. Food and Drug Administration (US FDA), for its vertically integrated, complex injectable drug product, Micafungin.

MOIL tanked 12.41%. The company said that it has recorded monthly managanese ore sales of 2.15 lakh tones in May 2024, registering a growth of 41% over May 2023.

IPO Update:

The initial public offer (IPO) of Kronox Lab Sciences received 16,45,99,160 bids for shares as against 66,99,000 shares on offer, according to stock exchange data at 17:00 IST on Tuesday (04 June 2024). The issue was subscribed 24.57 times.

The issue opened for bidding on Monday (03 June 2024) and it will close on Wednesday (05 June 2024). The price band of the IPO is fixed between Rs 129 to Rs 136 per share. An investor can bid for a minimum of 110 equity shares and in multiples thereof.

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