Indian Equity Market: How is the market expected to open on Monday after exit polls, GDP data release?

For Indian investors who have endured a volatile week, it’s time to celebrate as the stock market is set to boom on Monday, June 3, after exit polls showed the NDA coalition will win over 350 seats.

In addition to the exit polls, markets will also react to domestic GDP data and US core PCE data, which will likely add to volatility on Monday. Better-than-expected US economic data has dampened interest rate cut hopes, while global economic data is generally weak.

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“Monday morning market will open on a strong gap up as it celebrates the EXITPOLL numbers. The gap up comes on the back of exit poll report that BJP will comfortably win 350+ seats, which will take Nifty towards all-time highs. At this point, focus should be on the next 5-year plan which is more important than the next 2-3 days. With the election results being a huge success, focus will shift to capex, government spending, valuations and earnings growth,” said Prashanth Tapse, senior VP (research), Mehta Equities Ltd.

This week, stock markets have signaled fear and tension over looming political uncertainty, which has resulted in a spike in volatility in April and May.

Till Thursday, the major stock indexes had fallen for five straight sessions, dropping 2.4% from their recent peaks at the beginning of the week. The fall came amid considerable volatility ahead of the release of the poll results. This week, the Sensex plunged 1,449 points while the Nifty slid 426 points, its first weekly decline in three weeks. Traders adjusted their positions in anticipation of the exit poll results and the final outcome.

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Where will the market head on June 3?

Generally, analysts expect the Nifty 50 to rise towards the range of 23,000-23,400. Conversely, analysts suggest that the index may hold around 22,400 on the downside.

While experts are predicting a gradual uptrend, the Reserve Bank of India’s monetary policy may cause market volatility this week, hence experts have advised traders to closely monitor their leveraged positions and await further clarity.

“This will be encouraging for the bulls and trigger a major rally in the market on Monday. Large names like financials, capital goods, auto and telecom will lead the rally. The bulls will be further buoyed by the better than expected GDP growth of 8.2 per cent announced after trading hours on Friday. Technically and fundamentally, the market is poised to move higher,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Investors can expect gains of 3-5 percent from the market on Monday, according to Gary Duggan, chief investment officer at Dubai-based Dalma Capital Management, cited by Bloomberg.

Also read: What to expect this week: Exit polls, Indian Lok Sabha election results, Reserve Bank of India policies, car sales and other major market triggers this week

“The proposed majority size would allow the government to continue its current policy program without any relaxation, so we could see markets delivering returns of 3-5% on Monday,” Dugan said.

Prashant Tapse of Mehta Equities further said, “Technically, with VIX index at high, the market will trade extremely volatile but sustaining the market above 22,400 levels will keep it in positive territory with a possible upside towards 22,800-23,000 levels in the coming days. A close above 23,111 will be highly watched.”

What comes next after the election results?

After the new government and cabinet are in place, markets will start moving towards the upcoming Union Budget, which will determine India’s growth over the next five years and ultimately lead to improved corporate earnings, Taps said.

“The next 100 days of the new government will be crucial. The market capitalisation of listed companies has swelled by $1 trillion in just six months and there is a chance that the same magic can be repeated. India’s market capitalisation aims to double to $10 trillion over the next four to five years and key areas of focus include public corporations, power, defence, railways and capital expenditure driven sectors,” he added.