PSU stocks, especially those belonging to railways and defence, were among the top gainers in today’s trading session. PSU stock RVNL rallied over 8%, HUDCO was up 7% while PFC, REC, IRCON, HAL, BEL, Mazagon Dock and Cochin Shipyard rallied in between 4-6% each.
Shares of Adani Group companies, many of which are also capex plays, also rallied up to 7% with Adani Transmission leading the momentum. The conglomerate’s cash cow Adani Ports stock was trading 5% higher while the flagship entity Adani Enterprises was up 4%.
“The result in the Haryana election is better than expected for the market. The narrative that the government will turn more populist is being turned down now and therefore there is a rally in PSU stocks. The order books of these PSUs are driven by the government and now the market is taking an optimistic stance,” Sunny Agrawal, Head of Fundamental Equity Research, SBI Securities, told ETMarkets.
The election results also had a positive impact on the market with Sensex breaking a six-day losing streak to gain up to 700 points during the day. Nifty also rallied 1% to reclaim control over 25,000-level.
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Haryana victory signals continuity in economic policy and, therefore, is positive for markets.
“State elections results will have a positive impact on markets. The victory of BJP in Haryana is a shot in the arm for BJP after the mild setback in the Union elections this year. The victory in Haryana also sends the message that farmers are with the ruling dispensation and this has the potential to slowly revive the farm reforms which had to be shelved following the farmers protests,” V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.
BJP has been the favourite of stock investors as its leadership has been stable and pro-business.
“At least in the short term it may be able to stabilise market corrections. However, although this sentiment may be a short-term driver, one has to be on guard regarding the developing geopolitical dynamics and its influence on supply chain disruption and associated ramifications for the wider economy-these factors would continue to drive the market behavior in the long run,” said Jathin Kaithavalappil, AVP, Choice Broking.
Beyond elections
A part of the rally is also being attributed to China where official state planner National Development and Reform Commission held back from unleashing more stimulus.
The downside in the last few days on Dalal Street was directly related to the resurgence of Chinese equities where a bazooka sucked out liquidity from emerging markets as FIIs followed a “Buy China, Sell India” policy.
Investors had been expecting more stimulus measures from China as its markets opened after a week-long public holiday.
The news had a negative impact on prices of metals in global markets as well as metal stocks in India. Iron ore prices fell 5% while copper, aluminum, zinc and nickel were trading around 2% lower in international markets.
On Dalal Street, NMDC lost 5%, Tata Steel 3% while JSW Steel, Jindal Steel and Hindalco were trading around 2% lower.
