Indian benchmark indices, BSE Sensex and Nifty50, are likely to open higher after a solid victory of Bhartiya Janta Party (BJP)-led Mahayuti alliance secured a comfortable and landslide victory in Maharashtra assembly elections. The BJP, Shiv Sena and NCP (Ajit Power) alliance secured nearly 50 per cent votes and Dalal Street is likely to cheer this landslide win.
Despite conceding Jharkhand to its staunch opponent- INDIA Alliance- NDA's win in Maharashtra is seen as a big booster for the Indian stocks markets, if one goes by the signals of GIFT Nifty. Nifty futures on the NSE International Exchange traded 440.05 points, or 1.85 per cent, higher at 24,326.60, hinting at a solid start for the domestic market on Monday.
Domestic brokerage firm Motilal Oswal Financial Services said the staggering victory of the ruling BJP-led NDA alliance in Maharashtra should bring the undercurrents back in the markets. This decisive verdict ends the chronic instability in one of India’s most industrialised and economically important states. with stability in the governance and bring focus on infra, it said.
Motilal Oswal said the NDA has also done well in UP's by-polls, having won 7 of 9 seats; won 6 out of 7 seats in Rajasthan; won all 5 seats in Assam; and all four seats in Bihar. The INDIA alliance, on the other hand, won six of six seats in West Bengal and three of three seats in Karnataka.
To recall, BJP won 132 out of the 145 seats it contested at a strike rate of 91 per cent. Shiv Sena, under Eknath Shinde, emerged as the second-largest party in the NDA, winning 57 seats, 10 more than the combined tally of the entire opposition alliance. First time in six decades in Maharashtra, an opposition party has failed to secure 10 per cent of seats, required to appoint a leader of opposition.
Outcomes of the Maharashtra and Jharkhand elections will be crucial triggers. Especially Maharashtra where NDA witnessed a one sided victory which is likely to boost bullish sentiment further, said Santosh Meena, Head of Research, Swastika Investmart. However, global factors continue to pose significant risks, he said.
"Escalating tensions between Russia and Ukraine, rising crude oil prices may add to inflationary concerns. Simultaneously, a strengthening dollar index and elevated US bond yields are weighing on the rupee, leading to record foreign institutional investor (FII) outflows of Rs 1.55 lakh crore in October and November combined," Meena said.
Maharashtra as an engine of this growth story aims to be a $1 trillion economy. Political stability in the western state is crucial for Indian markets given its economic clout and significance as it contributes 15 per cent to India’s GDP and 20 per cent of industrial output, noted Pranay Aggarwal, CEO, Stoxkart – a discount broker.
"As a key industrial hub, the political stability in Maharashtra will signal broader national trends, shaping market dynamics and policy predictability with ease for FDI and Make in India initiatives that will influence investor confidence and drive market sentiment and industrial growth together," he said.
Nifty Outlook Amol Athawale, VP-Technical Research, Kotak Securities believes that as long as Nifty50 is trading above 200 day SMA or 23, 600 the pullback formation is likely to continue. On the higher side, it could move up to 24,000-24,200. On the flip side, below 23,600, the sentiment could change.
Downside follow through on the break of the 200-day average was completely missing, said Axis Securities. An immediate upside hurdle remains at 24,000 followed by 24,400-500, it added, cautioning any failure to hold 23,200 will bring 22,500 into play.
The Nifty witnessed a strong recovery as the index moved back above the 200-DMA, indicating an improving trend. The RSI has entered a bullish crossover near the oversold zone, suggesting positive momentum, said Rupak De, Senior Technical Analyst, LKP Securities.
"The sentiment appears favorable for a meaningful rally in the short term, as long as the index stays above 23,600. Immediate resistance is seen at 23,960–24,000. A decisive move above 24,000 could trigger a rally toward 24,500. On the downside, supports are placed at 23,750 and 23,550," he added.
Nifty Bank outlook Bank Nifty witnessed a sharp up move and contributed to the up move, said Jatin Gedia, Technical Research Analyst at Sharekhan. "We expect the positive momentum to continue towards 52,100 from a short term perspective. The crucial support zone is placed at 50,500-50,400," he adds.
For the Bank Nifty now, 50,500 and 50,300 would be key support zones while 20 day SMA or 51,250 and 50 day SMA or 51,850 could be the crucial resistance areas for the short-term traders, said Athawale from Kotak Securities.
Stocks to watch out Largecap valuations look reasonable and a mini risk-on rally seems likely, it said. Among largecap stocks, Motilal Oswal prefers Mahindra & Mahindra, State Bank of India (SBI), Larsen & Tourbo (L&T), Indian Hotels, ABB, Dixon and Bharti Airtel. It also likes Trent, Hindalco, Titan Company and HCL Technologies.