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The Indian stock market experienced a surge on Tuesday, fueled by the Bharatiya Janata Party (BJP)'s projected victory in the Haryana state elections. This win, marking a third consecutive term for the BJP in Haryana, is seen as a positive sign for the Modi government's economic policies and its commitment to infrastructure development. The so-called 'Modi stocks,' companies benefiting from government-led capital expenditure (capex) cycles, witnessed a notable rebound, with some rising up to 8%.
Public sector undertakings (PSUs), especially those associated with railways and defense, were among the top gainers. This surge in PSU stock prices reflects market optimism surrounding the government's continued focus on infrastructure projects. The positive sentiment is further bolstered by the expectation that the BJP's win will lead to a greater emphasis on infrastructure development initiatives.
The market's overall performance was also influenced by the election results, with the benchmark Sensex index snapping a six-day losing streak and climbing over 700 points. The Nifty index also rallied, gaining 1% and reclaiming the 25,000-level. Analysts attribute this positive market reaction to the perceived stability and continuity in economic policies that the BJP's victory suggests.
While the immediate impact of the election results is positive for the market, experts caution that it's a short-term driver. The global economic landscape, marked by geopolitical tensions and supply chain disruptions, will continue to influence market behavior in the long run. The resurgence of Chinese equities and the potential for further stimulus measures from China are also factors that will shape the global market outlook.
The news from China had a negative impact on metal prices in both global and Indian markets. Iron ore prices saw a 5% decline, while copper, aluminum, zinc, and nickel traded lower internationally. This dip in metal prices affected Indian metal stocks, with NMDC, Tata Steel, JSW Steel, Jindal Steel, and Hindalco experiencing losses.
Source: Modi stocks rise in revenge mode as BJP seen scoring a hattrick in Haryana elections