Sensex and Nifty claw back with exit polls suggesting BJP win in UP and a sense of de-escalation in Russia-Ukraine war

• Sensex bounced back over 3,000 points on Wednesday led by real estate and infrastructure, auto and banking stocks.
• Currently, the market focus is on the election outcome of a few Indian states that will indicate how the ruling BJP government will approach the general elections in 2024.
• Meanwhile, the Russia-Ukraine war seems to be cooling off a bit after Ukraine showed a lesser interest in NATO membership, which was the main reason for the war.

Indian benchmark indices Sensex and Nifty 50 bounced back sharply on March 9 after crashing 7% each in the last one month because of a full-blown war between Russia and Ukraine.

On Wednesday, markets surged backed by rise in real estate and infrastructure, auto and banking stocks.

After bouncing back, Sensex and Nifty 50 closed 2% up on Wednesday.

The Indian market took a big hit as the war triggered the commodity market, especially crude oil prices that the country spends a lot on. Hence, as soon as Russia invaded Ukraine, markets took a toll as investors were worried about the stability of the Indian economy.

The country is dependent on oil imports and any rise in oil price increases the import bill. India imports over 80% of its oil needs.

And after Ukrainian President Zelenskyy indicated that they were no longer interested in NATO membership, which was the main reason behind the war, market sentiment improved as this would mean the war would cool off.

There is more to the party as the exit polls in Uttar Pradesh (UP) state election predict a sweeping win for the Bharatiya Janata Party (BJP). This is an important factor impacting the market sentiment as the state election will decide how the ruling party i.e., BJP approaches the general elections due in 2024.

“...The UP election is considered important from the market perspective as it is a major state to define the political situation and it could have caused a major swing in the market if there was no big global event. Earlier, the market was a little doubtful about the majority of BJP in UP, but now there is some confidence after exit polls. Market pundits are also not very enthusiastic about the UP election amid global concerns however they feel BJP will be able to gain a majority with lesser seats compared to the last election. The outcome of election results will have an impact for a day or two and we will see a positive reaction in the market if BJP comes in UP, but if the global situation doesn't improve then we will see sell on [sic] rising in the market,” said Parth Nyati, founder at Tradingo.
“A resounding win for BJP in Uttar Pradesh will likely give a booster to the stock markets, but it will only have a temporary impact,” said Ravi Singh, vice president and head of research at Share India.


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