Market may see a positive start, all eyes on vote counting

GIFT Nifty:

Early signs from Nifty 50 futures trading on the GIFT platform suggest a possible 51.50 point gain for the Nifty at the market open.

Meanwhile, vote counting for the Lok Sabha elections commenced this morning. Prime Minister Narendra Modi is predicted to secure a historic third term in office. This outcome is anticipated to positively impact the Indian financial markets, with hopes of further economic reforms.

Foreign portfolio investors (FPIs) bought shares worth Rs 6,850.76 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 1,913.98 crore in the Indian equity market on 3 June 2024, provisional data showed.

FPIs have bought shares worth over Rs 6850.76 crore in June 2024 (so far). They offloaded shares worth 42214.28 crore in May 2024.

Global Markets:

Asian stock markets showed a mixed performance 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.

Oil prices continued their decline, with both US crude ($73.91/barrel) and Brent crude ($78/barrel) reaching four-month lows. This follows the decision by OPEC+ to gradually increase production, reducing overall output cuts.

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 Monday, U.S. Treasury yields fell to the lowest point in two weeks. The 2-year yield was 6 basis points lower while the 10-year yield was down 11 basis points.

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.

Domestic Markets:

Domestic stocks soared today on exit poll euphoria! Buoyed by exit poll predictions of a strong BJP win, investors piled into Indian stocks, sending the Nifty50 above 23,250. PSU banks and energy stocks led the charge, with PSUs particularly happy about the potential for continued reforms. How long this rally lasts depends on the actual election results. A big win could trigger a flood of sidelined cash back into the market, fueled by optimism. In the coming weeks, all eyes will be on the 100 days measures list and final budget for further cues. The S&P BSE Sensex galloped 2,507.47 points or 3.39% to 76,468.78. The Nifty 50 index soared 733.20 points or 3.25% to 23,263.90.

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