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Below the Views on the Market by Mr. Ajay Menon, MD & CEO, Broking & Distribution, Motilal Oswal Financial Services

Indian equities plunged today after the vote counting trends suggested a lower seat count for the ruling NDA government. At one point, Nifty was down almost 2000 points (9.3% down) before recovering a little to finally close at 21884 levels with a loss of 1379 points (5.9% down). We have seen a spurt in volatility, and India's VIX crossed the 31.5 level, which created more pressure on the market. The broader market may turn volatile as sentiments get hit, but a major trend of the Indian Equity market is expected to revive after the cooldown of volatility over the next couple of days. The latest numbers suggest that the NDA government could return to power with a lesser than last time seats. We expect the volatility around the outcome to reduce over the next few days and market focus to return on macro and fundamentals which continue to remain strong. Once the new government is formed, it will present its first and full budget for FY25 in the next few weeks, where themes like capex, manufacturing, rural, consumption, and credit lending will be back in focus. The rural and consumption theme would also pick up pace with the onset and progress of Monsoon, which is predicted to be above normal this year. While the market volatility may continue in the near term, retail investors should take this correction as an opportunity to accumulate quality names in 3-4 tranches. Over the next few days, the narrative around government formation and RBI monetary policy would take centre stage.

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