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Below the Quote on Daily Market Commentary by Mr. Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd

Nifty50 opened gap up, continuing the momentum of last session and ended the day 315 points higher (+1.3%) at 24221 levels. This was led by optimism after the BJP-led Mahayuti alliance’s victory in Maharashtra, which boosted expectations of political stability and smoother policy implementation. Thus Nifty Heavyweights like HDFC Bank, Reliance Industries, ICICI Bank, L&T, and SBI contributed significantly to gains. Broader markets outperformed, with the smallcap index rising 2%, and sectors like PSU banks and realty stocks leading the rally. In the past two months, the index saw a ~9% correction due to moderate corporate earnings, FII outflows (~USD 14b), and a strengthening dollar. However, the staggering victory of the ruling NDA alliance in Maharashtra should bring the undercurrents back in the markets. With elections now behind, we expect the government to now focus on spending (1HFY25 govt. spending is flat YoY and is down 17% for Capex spending). This poll result, coupled with a recovery in rural spending (on the back of good monsoon and expected strong Kharif output) should improve the demand narrative. The wedding season in 2HFY25 (30% higher weddings YoY) will also provide a fillip to demand. We also expect modest recovery in corporate earnings in 2HFY25E (Nifty earnings expected to grow 7% in 2H vs. 4% in 1H).

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