Indian Indices Dip After Record Rally; Sensex Ends 298 Points Lower

Thu, 23 May Closing

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It was a volatile day for Indian share markets today.

The BSE Sensex and NSE Nifty opened at record high and went on to touch 40,000 and 12,000 for the first time ever in early trade today as counting of Lok Sabha Election 2019 showed Prime Minister Narendra Modi is set to return for another term as the NDA led majority seats according to the latest trends.

However, the momentum faded away during closing hours and Indian Indices ended their trading session deep in the red.

At the closing bell, the BSE Sensex stood lower by 298 points (down 0.8%) and the NSE Nifty closed down by 80 points (down 0.7%).

The BSE Mid Cap index ended the day down 0.2%, while the BSE Small Cap index ended the day down 0.1%.

Sectoral indices ended on a mixed note with stocks in the FMCG sector, metal sector and consumer durables sector witnessing most of the selling pressure. Telecom stocks and realty stocks were witnessing buying interest.

The rupee was trading at 70.05 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 1.6% and the Shanghai Composite was down by 1.3%. The Nikkei 225 was down 0.6%.

European markets were also trading on a negative note. The FTSE 100 was down by 1.4%. The DAX was trading down by 1.9%, while the CAC 40 was down by 1.8%.

India began counting hundreds of millions of votes in its general election today, with a coalition led by Prime Minister Narendra Modi's party already preparing to form the next government.

The National Democratic Alliance (NDA), led by Modi's Hindu nationalist Bharatiya Janata Party (BJP), is expected to surpass the 272 seats needed to command a majority in the lower house of parliament, six of seven exit polls showed on Sunday.

Counting of votes began at 8 am in the morning and the final results in the polls, in which around 900 million Indians were eligible to vote, are due by the evening.

According to latest trends, BJP led majority seats and Prime Minister Narendra Modi looks set to return for a second term.

While the Indian stock market has given a big thumbs up to the re-election of the Modi government, what does this mean for the market going forward? And how can one play markets post elections?

Tanushree Banerjee answers these questions in today's edition of The 5 Minute WrapUp. You can read the entire article here: My Top 7 Stocks to Buy as Modi Returns to Power

Also, with Sensex touching the 40,000 mark today, does Sensex 1,00,000 sound outrageous from where we are right now?

History indicates a healthy rise in Sensex post elections. In the three elections prior to this, we have seen a government come back to power, and change hands but the Sensex has moved one way i.e. upwards.

Will the Sensex Be Close to 1,00,000 By the Next Election?

Here's what Tanushree has to say about this...

• There are bound to be bumps along the way. The move from 5,000 to 40,000 wasn't a straight one. We had a global recession, countless moments of doomsday predictions as well.
  
  But we got there.
  
  And now, with a stable government at the centre, the pace might pick up.
  
  I believe there are 50 irreversible trends that will the push Sensex to 1,00,000.
  
  And these 50 trends look set to play out soon.
  
  The ride might have already begun looking at the stock market's reaction to the election results.
  
  But it is still early days. And the time to hop on to the ride is right now!

We will keep you updated on the developments relating to the Lok Sabha Elections 2019 happening today.

Meanwhile, look out for the stocks that will rise fast when the tide of the market turns up.

Market participants were tracking GIC share price, Sun TV share price, Ramco Industries share price, and Novartis share price as these companies announced their Q4FY19 results today.

You can also read our recently released Q4FY19 Results: Bajaj Auto, PI Industries, GSK Pharma.

In the news from commodity space, crude oil prices dropped today amid surging US crude inventories and weak demand from refineries.

The Energy Information Administration (EIA) said US crude oil inventories rose last week, hitting their highest levels since July 2017, due to weak refinery demand.

Commercial US crude inventories rose by 4.7 million barrels in the week ended May 17, to 476.8 million barrels.

US crude oil production also rose by 100,000 barrels per day (bpd) to 12.2 million bpd, putting output near its record of 12.3 million bpd reached late last month.

Note that in its latest monthly report on the global oil market, the International Energy Agency (IEA) said that geopolitics and industry disruptions were clouding the outlook it believes and that the market balance is set to flip from surplus into deficit.

How this pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

Also, speaking of crude oil, within the oil industry, there are signs of a further rise in output from the United States, where crude production has already surged by more than 2 million barrels per day (bpd) since early 2018, to a record 12.3 million bpd.

That has made the United States the world's biggest producer ahead of Russia and Saudi Arabia.

The number of rigs drilling for gas in the United States fell by 3 to 183 in the week to May 3, while oil-directed drilling rigs rose by 2 to 807, the reports noted.

Also, crude oil prices have quietly creeped up this year.

Oil prices have jumped as much as 3.2% to their highest level since late 2018.

As you know, rising crude oil prices have a big impact on the Indian economy as it imports over 70% of its energy needs.

Rise in crude oil increases input costs for dependent firms. It also means rising inflation. Rising inflation means rising interest rates.

It also puts pressure on the government to cut excise duty, thereby impacting its revenues. We have already seen that happening.

Research Analyst, Richa Agarwal believes that this has the potential to bring down sentiments in the domestic markets. She further believes that, if oil prices continue their upward march in a tight global environment, a broader correction in the sentiment fueled domestic market cannot be ruled out.

To know more on what moved the Indian stock markets today, you can check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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