Defying unfavourable global markets, domestic indices inched up on Friday as investors cheered the formation of a stable central government following the BJP’s spectacular victory in the Lok Sabha elections.
The volatility index or the ‘VIX’ reflected the samesentiment as it closed 15 per cent lower at 16.54. A decisive victory for theBJP-led NDA buoyed investors.
The Sensex jumped by 623.33 points or 1.61 per cent to39,434.72. It touched an intra-day high of 39,476.97 and a low of 38,824.26.The Nifty scaled up by 187.05 points or 1.60 per cent to 187.05.
“The risk taking ability came back as the electionsconcluded with an overwhelming result. The market settled for a board basedrally expecting better outlook for the economy in the next one to twoquarters,” said Vinod Nair, Head of Research, Geojit Financial ServicesLtd.
However, global markets continued to trade under pressure asBritish Prime Minister Theresa May said she will resign on June 7. May put inon her successor to find a parliament consensus on the Brexit issue.
Meanwhile, US President Donald Trump labelled Chinesetelecommunications giant Huawei Technologies Co Ltd “very dangerous”.
These among other reasons forced the Asian markets to closemixed trading near four-month lows on Friday, said Deepak Jasani of HDFCSecurities. “A slide in crude oil prices also helped boost the marketsentiments,” he added.
“The upward trend is likely to continue in thenear-term and settle for a long-haul expecting the upcoming final budget,”Vinod Nair added.
However, there is a massive slowdown in the domestic economyas can be seen from the dismal IIP numbers as also Q4 earnings declared by manyFMCG, automobiles and consumer durables companies. “Post the euphoria of a strong stablemandate at the Centre, the markets would be keenly looking at cabinet formationand whether the government is able to attract credible technocrats withspecific domain knowledge in areas of finance and agriculture,” saidKrishna Kumar Karwa, Managing Director, Emkay Global Financial Services.